United Technologies Boosts Outlook as New Products Gain Traction
United Technologies Corp. raised its 2017 profit forecast for the second consecutive quarter, buoying the industrial manufacturer as it plans a major expansion in aerospace with the acquisition of Rockwell Collins Inc.
The maker of elevators and aircraft landing gear is recording the strongest organic growth since 2011 as it benefits from recent investments in new products, particularly in its climate-control and Pratt & Whitney businesses said CFO Akhil Johri. The company is boosting sales in the Pratt jet-engine unit as it rolls out a critical new turbine.
“The investments we have been making in innovation these last few years are starting to show up in our numbers,” said Johri. The climate unit has introduced more than 200 new items in recent years, he said.
Adjusted earnings this year will be $6.58 to $6.63 a share, up from a previous range of $6.45 to $6.60 a share, the Farmington, Conn.-based company said on Sept. 24.
The new outlook tops the $6.57 average of analysts’ estimates compiled by Bloomberg. Sales will be $59 billion to $59.5 billion, an increase of $500 million on the low end, the company said.
United Technologies reached the blockbuster deal to buy Rockwell Collins last month in one of the biggest tie-ups in aerospace history. The combined company will offer a broad suite of products, from Rockwell’s cockpit displays to United Technologies’ Pratt & Whitney engines.
The acquisition, projected to close next year, would better position United Technologies to withstand the squeeze from plane makers Boeing Co. and Airbus SE for pricing discounts and higher output.
Hitting Target
United Technologies is “well on our way” to hit the target of delivering 350 to 400 of Pratt’s new geared turbofan jet engine this year, CEO Gregory Hayes said. Pratt delivered 254 GTF units through the first three quarters.
Adjusted earnings fell to $1.73 in the third quarter, exceeding the $1.69 average of analysts’ estimates. Sales climbed 4.9% to $15.1 billion.
Revenue rose 11% in the Pratt & Whitney unit, which is increasing production rates for the GTF. The product, designed to compete with a General Electric Co. model on narrow-body planes, has faced a series of glitches, including durability problems and production delays. Pratt is rolling out fixes this year.
Commercial aftermarket sales jumped 11% in the aerospace and Pratt & Whitney divisions.
The Otis elevator business, which is facing persistent sluggishness in the Chinese construction market, increased sales 4.6%. Earlier this month, United Technologies named Judy Marks president of Otis.
By Richard Clough
