United Tech to Cut Jobs, Expects No Recovery in '09

United Technologies, whose products range from elevators to jet engines, plans to cut 11,600 jobs as it adapts to an economy that has grown worse than it expected just three months ago.

The diversified U.S. manufacturer also cut its 2009 profit forecast by roughly 13 percent and lowered its revenue target as it is no longer relying on an economic recovery later this year, its chief executive said Tuesday.

United Tech shares rose over 6 percent amid a broad stock market rally as Wall Street had regarded the company's profit target set in December as optimistic.

"Conditions have gotten very challenging,'' CEO Louis Chenevert told investors in a presentation that was monitored over the Web. "We intend to be fully prepared for a deeper and longer deterioration in market conditions.''

Combined with 2008 job cuts, the latest restructuring plan will reduce the Hartford, Connecticut-based company's workforce by about 18,000 positions.

As of December, United Tech employed about 220,000 people.

"The economic recovery previously anticipated in the second half of 2009 now appears unlikely,'' Chenevert said.

The world's largest maker of elevators and air conditioners said it expected to earn $4 to $4.50 per share in 2009, lower than the $4.65 to $5.15 it previously forecast.

Analysts were looking for profit of $4.60 per share, according to Reuters Estimates.

United Tech said it expected $750 million in restructuring costs this year, partly offset by $200 million to $350 million in gains. All told, one-time items will weigh profits down by 30 to 40 cents per share for the year.

The company, which also makes Sikorsky helicopters, now looks for revenue of $55 billion this year, down from a prior forecast of about $57 billion. It said it would cut its planned budget to repurchase shares by half to $1 billion.

It plans to reduce capital spending about 20 percent from 2008 levels, to below $1 billion.

One investor said the moves were a sign that United Tech was trying to stay a step ahead of a deteriorating world economy.

"The more you can get ahead of the ball, rather than behind it, you're going to get ahead in this marketplace,'' said Peter Klein, senior portfolio manager at Fifth Third Asset Management in Cleveland, Ohio, which owns United Tech shares.

Aviation, Construction Weak

United Tech's Carrier air conditioning business is being hard hit by a slumping construction market, while its Pratt & Whitney jet engine arm is feeling the pinch of fewer people flying, both on commercial jets and private planes.

"We are seeing significant pressure on commercial building installations and business-jet related markets,'' wrote Deutsche Bank analyst Nigel Coe, in a note to clients.

United Tech, which also makes Sikorsky helicopters, said it was holding its targeted takeover budget steady at $2 billion.

"There are some really good values out there for certain properties,'' Chenevert said. "We are a willing buyer and as long as we encounter a willing seller at some point in time, deals will be made.''

But he cautioned the company would be shying away from hostile bids. The company last year unsuccessfully pursued a takeover of Diebold Inc, a maker of automated-teller machines.

"I don't think this is a good environment for hostile activity,'' Chenevert said.

United Tech's competitors include Eurocopter, a unit of EADS, in helicopters; General Electric in jet engines and ThyssenKrupp in elevators.

Its shares were up $2.52 at $40.08 on the New York Stock Exchange Tuesday afternoon.

At Monday's close, the stock had fallen 44 percent over the past year, in line with the 45 percent slide of the Dow Jones industrial average.

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