United Technologies' Net Income Rises on Aerospace

By Rachel Layne

July 18 (Bloomberg) -- United Technologies Corp., the maker of Otis elevators, said second-quarter profit rose 4.1 percent on higher overseas sales to airlines, governments and building developers. The company boosted its 2007 sales and profit forecasts.

Net income increased to $1.15 billion, or $1.16 a share, from $1.1 billion, or $1.09, a year earlier, exceeding analysts' estimates. Revenue climbed 13 percent to $13.9 billion on gains in all six business segments, the Hartford, Connecticut-based company said today in a statement.

United Technologies, which gets more than 60 percent of sales overseas, benefited from orders for electrical systems at Hamilton Sundstrand and aircraft at Sikorsky. Pratt & Whitney spare jet engine parts and service contracts increased. Otis and Carrier air conditioning sold more equipment for high-rise buildings in fast-growing Asian economies including China.

``These were solid results and we are pleased with the improved performance at Carrier despite the weaker North American residential market,'' wrote Nicole Parent, a New York- based analyst at Credit Suisse. She has an ``outperform'' rating on the stock.

Shares of United Technologies fell $1.17 to $75.67 at 10:13 a.m. in New York Stock Exchange composite trading. Before today, they had climbed 33 percent in the past year, while the Standard & Poor's 500 Index gained 26 percent. The stock had added 6.6 percent from July 10 through yesterday.

No Surprise

``We wouldn't be surprised to see the stock take a breather today despite the good results,'' wrote Myles Walton, an analyst at CIBC World Markets in Boston, in a note to clients today.
Chief Executive Officer George David raised the annual per- share profit forecast to $4.15 to $4.25 a share, up from $4.05 to $4.20, the statement said. The company also increased its revenue forecast to $53 billion from $51 billion. Analysts, on average, estimated $4.17 in earnings and $52.4 billion in sales.

Sales from businesses the company has owned more than a year, or ``organic'' revenue growth, should continue to rise, adding to a four-year pattern and prompting the forecast increase, David said. Such sales increased 10 percent in the quarter.

``Solid markets worldwide in commercial aviation and commercial construction, coupled with the successes of a wide range of new UTC products, are doing this,'' David said in the statement. ``We see these conditions continuing over the balance of the year and into 2008.''

Fire and Safety

United Technologies, which also owns UTC Fire and Security, used a 7-cent tax-related gain in the year-earlier second- quarter to help pay for cost reductions. Excluding that gain, profit would have climbed 12 percent in the just-ended quarter. The current quarter includes 2 cents a share in restructuring costs, the company said.

Otis, the world's biggest elevator and escalator maker, increased profit 13 percent to $532 million on a 13 percent sales gain to $2.86 billion. Profit at Carrier, the world's biggest air-conditioner maker, rose 19 percent to $489 million as revenue grew 8.1 percent to $4.06 billion.
Income at Pratt & Whitney declined 2.4 percent to $522 million as revenue rose 14 percent to $3.11 billion. Excluding a gain in the year-earlier period and restructuring costs, profit would have climbed 15 percent, United Technologies spokesman John Moran said.

Sikorsky sales climbed 56 percent, driving a more than doubling of profit to $87 million. Hamilton Sundstrand profit gained 16 percent to $246 million on a 9.6 percent sales rise.

The average estimate was for profit of $1.15 a share from 15 analysts surveyed by Bloomberg News.

In 2006, the company cut its workforce by 3,800 positions and closed 500,000 square feet of factory and office space, according to its annual report filed with U.S. regulators.