UPDATE 1-Eaton trims full-year profit forecast again

Friday, 25 Oct 2013 | 8:32 AM ET

Oct 25 (Reuters) - Diversified manufacturer Eaton Corp cut the top end of its full-year profit forecast for the second time and reported lower-than-expected quarterly revenue, citing weakness in the heavy-duty truck and hydraulic systems markets.

Eaton shares fell 1.5 percent in premarket trading.

The company, whose products range from truck transmissions to aircraft fuel systems, said it expects its markets to be flat in 2013, compared with its previous estimate of a 1 percent growth.

Chief Executive Alexander Cutler said the company had expected third-quarter sales to be about $75 million higher than the second quarter.

"Our actual revenue increase from the second to the third quarter was only $5 million as a result of continued sluggish economic growth around the world," Cutler said.

Eaton's third-quarter revenue jumped 42 percent to $5.6 billion from a year earlier, but fell short of the average analyst expectation of $5.7 billion.

Nearly all of the growth came from acquisitions, the largest of which was the $11.8 billion purchase of Cooper Industries in 2012.

The Cooper deal expanded Eaton's electrical business, which makes lighting and wiring devices for markets ranging from mining to oil and gas and utilities.

Combined revenue from Eaton's electrical products and electrical systems units nearly doubled during the quarter, accounting for 60 percent of total sales.


Eaton said it expects an adjusted full-year profit of between $4.05 and $4.15 per share, down from its previous forecast of $4.05-$4.25 per share.

Analysts had expected $4.18 per share.

Third-quarter net income rose to $510 million, or $1.07 per share, from to $345 million, or $1.02 per share, a year earlier.

Excluding items, earnings of $1.12 per share met with the analysts' average estimate, according to Thomson Reuters I/B/E/S.

Eaton shares closed at $68.50 on the New York Stock Exchange on Thursday.

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