United Tech Posts Lower Profit, Sees Growth in '10

The declines come as a slumping economy crimps demand for air conditioners in the face of slowing construction activity around the world and for spare parts for commercial aircraft as global flying hours decline.

The world's largest maker of elevators and air conditioners confirmed Tuesday that it expected profit to fall 8 percent to 18 percent this year, but expects to return to growth next year as aggressive cost cutting moves - including 18,000 job cuts in 2008 and 2009 combined - begin to pay off, executives said.

United Tech expects its revenue, which fell 12 percent in the first quarter, to decline less sharply as the year progresses.

While order rates remain down, there are signs of stabilization, especially in China, which is starting to see the early benefits of a stimulus program, Chief Financial Officer Greg Hayes said on a conference call with analysts.

United Tech shares rose 4 percent to $47.63 as profit topped analysts' expectations by one cent, according to Reuters Estimates.

"The company seems to be managing the downturn better than expected," Merrill Lynch (MER) analyst Ronald Epstein wrote in a note to clients.

The weakest segment in the quarter was Carrier air conditioners, where profit fell 91 percent on a 27 percent revenue decline.

"Although Carrier's results are disappointing, we expect they have reached a bottom and should begin to improve," Epstein wrote.

Profit Tumbles

United Tech, whose other products include Black Hawk helicopters and Otis elevators, said quarterly earnings fell to $722 million, or 78 cents per share, from $1 billion, or $1.03 per share, a year earlier.

Revenue declined to $12.25 billion from $13.96 billion.

"Order trends were weak in the quarter, although we saw stabilization in the rate of year-over-year decline across most of our businesses in March," Chief Executive Louis Chenevert said in a statement.

The Hartford (HIG) , Connecticut-based company stood by its full-year profit forecast of $4 to $4.50 per share.

The outlook, which it had lowered in March, reflects a decline of 8 percent to 18 percent from 2008.

United Tech's competitors include Eurocopter, a unit of EADS in helicopters, General Electric (GE) (GE is the parent company of CNBC) in jet engines and ThyssenKrupp in elevators.

United Tech has said it aims to make about $2 billion in acquisitions this year, with management noting that depressed stock valuations could present an opportunity for it to be aggressive on the takeover trail.

So far this year, United Tech shares are down about 11 percent, roughly in line with the Dow Jones industrial average, of which it is a component.

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