United Tech cuts outlook on aerospace, elevator pressures

An attendee looks at an aircraft engine from Pratt & Whitney, a unit of United Technologies, on display during the China International Aviation & Aerospace Exhibition in Zhuhai, China.
Brent Lewin | Bloomberg | Getty Images

United Technologies, which agreed on Monday to sell its Sikorsky helicopter business, cut its full-year profit outlook on Tuesday as it warned of pressures in its aerospace systems and Otis elevators businesses.

United Tech, whose shares fell 4.1 percent after the company also reported second-quarter results, on Monday said it would sell its Sikorsky helicopter unit to Lockheed Martin Inc for $9 billion, after saying in June it planned to exit the business following a strategic review.

Excluding Sikorsky, United Tech now expects earnings from continuing operations in a range of $6.15 to $6.30 per share this year, down from the prior range of $6.35 to $6.55 per share.

The company said the commercial aftermarket for its UTC Aerospace Systems business will be "significantly below" expectations.

United Tech has been hurt as airlines have provisioned fewer replacement parts than expected for new aircraft for their maintenance stations, Chief Executive Greg Hayes said in an interview.

The company, which already twice this year had trimmed its 2015 outlook, also cited struggles for its Otis elevators business in Europe and China.

"It's a big take down and nobody is happy about it," Hayes said in an interview. "I thought we had to just be realistic in terms of the second half."

With the fate of Sikorsky settled, Hayes said the company was ready to turn its focus to acquisitions, and was "looking at everything from $500 million to $5 billion."

"We're done shrinking UTC with the completion of this divestiture," Hayes said.

The U.S conglomerate said that second-quarter net income fell to $1.54 billion, or $1.73 per share, from $1.68 billion, or $1.84 per share, a year ago.

Analysts were looking for $1.71 per share, according to Thomson Reuters I/B/E/S.

Sales fell 5 percent to $16.33 billion, hurt by the impact of the strong dollar on foreign sales. On an organic basis, revenue rose by 3 percent.

Through Monday, the company's shares had fallen about 4 percent so far this year against a 3.4 percent rise for the S&P 500 index.