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Diversified manufacturer United Technologies reported better-than-expected quarterly profit Thursday on solid demand for Otis elevators and fire and security equipment from the commercial construction sector, sending its shares up almost 5 percent.
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The world's largest maker of elevators and air conditioners also raised its full-year profit forecast, saying it was managing its way through a slowing economy and moderating demand for its aircraft components.
"You've got a very diversified company in a variety of different businesses that's extremely well managed," said Jim Huguet, chief executive of Great Companies, a Tampa, Florida-based money manager with about $300 million in assets, including United Tech shares. "I'm not surprised they did well."
United Tech [UTX
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] said second-quarter earnings rose 11 percent to $1.28 billion, or $1.32 per share, from $1.15 billion, or $1.16 per share, a year earlier.
Analysts, on average, had expected a profit of $1.30 per share, according to Reuters Estimates.
Profit growth was sharpest at its Otis elevator and Sikorsky helicopter units; earnings at its Carrier air conditioner operations, which are influenced by rising metals prices, were marginally lower.
Revenue rose 12.7 percent to $15.67 billion.
The company said it now expects full-year profit of $4.80 to $4.95 per share, up from a prior forecast of $4.65 to $4.85. Wall Street expects $4.88.
"While the challenges in the world's economies we saw at the outset of the year are materializing, especially with higher oil prices impacting the airlines and the U.S. economy generally, we remain confident in our ability to deliver on this increased guidance," Louis Chenevert, who took over as United Tech chief executive in April, said in a statement.
Moderating Aviation Demand
Chenevert said the company is "seeing some moderation" in demand for spare parts from the aviation sector.
Surging fuel prices are hammering the airline industry. AMR [AMR
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], parent of American Airlines, and Delta Air Lines [DAL
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] reported large quarterly losses on Wednesday, and orders at this week's Farnborough air show, the biggest such event in the world, have been well off their recent torrid pace.
"It is a test," said Huguet. "The airline industry is changing pretty dramatically. The offset is that other countries outside of the United States do not seem to be in as much of a slowdown" in air traffic.
United Tech shares rose $2.99 to $64.10 in premarket trading, up from a $61.11 close Wednesday on the New York Stock Exchange.
As of Wednesday's close, the shares were down 20 percent this year, compared with a 15 percent decline for the Dow Jones industrial average, of which United Tech is a component.
United Tech's main competitors include General Electric [GE
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], the parent of CNBC and CNBC.com, in jet engines, EADS subsidiary Eurocopter in helicopters, and Swiss Schindler Holding in elevators.
Hartford, Connecticut-based United Tech in March made an unsolicited $2.64 billion bid for Diebold [DBD
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], the No. 2 maker of automated teller machines. United Tech officials say Diebold management has declined to enter negotiations, and Chenevert says he will not pursue the takeover without a chance to scrutinize Diebold's books.
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