A $295 million fine levied by European regulators does not change the 2007 earnings forecast for United Technologies , the company's chief executive said Wednesday.
The company expects to take a net charge of 7 cents per share in the first quarter to satisfy the fine against its Otis Elevator subsidiary, United Technologies chairman and chief executive officer George David said Wednesday.
Otis was one of five elevator makers cited by the European Union for operating cartels that controlled the installation and maintenance of elevators and escalators in Belgium, Germany, Luxembourg and the Netherlands.
David said that despite absorbing the 7-cent net charge per share in the first quarter, he still expects earnings per share at between $4.05 and $4.20 for 2007.
"It's a pretty good commentary on the strength of the balance sheet," David said at the Citigroup Global Industrial Manufacturing Conference in New York City.
The European Commission, the executive body of the EU, charged Otis and the other four companies with rigging bids and divvying up the market. David said the company's involvement was limited to nine "renegading" executives, all since dismissed.
"This behavior is as repugnant to us as it was to the commission," he said.
He also said that although he recognizes the company must pay the fine, he thinks the regulators "decided to make a real big splash out of this," and that the amount is "disproportionate to the offense."
Revenue Seen Higher
Hartford-based United Technologies is the parent company of Otis, jet engine manufacturer Pratt and Whitney, aerospace company Hamilton Sundstrand, Sikorsky Aircraft, heating and cooling product division Carrier, and other businesses.
It said last month that it expects revenue for the year to increase to more than $51 billion, a 6.7% increase over revenue of $47.8 billion in 2006.
David said Wednesday that the company's product diversity, financial discipline and emphasis on improving productivity will keep it on track to meet the expectations outlined to analysts in January and reiterated in February.
"There's no significant change in the last couple of weeks," he said. "Everything looks good for the year."
David, who had previously announced his plans to retire from his job as chief executive officer, said Wednesday that he has narrowed his departure date to April 2008. However, he said, he will stay in his role as board chairman to help in the transition to new leadership.
"My goal is to have investors feel as comfortable with my successor as they do with me," he said.
Louis R. Chenevert, the company's president and chief operating officer, is second in line behind David at the conglomerate, although the board would have to vote on if, and when, Chenevert could move into the top spot.
Shares of United Technologies closed Wednesday at $64.26, up 13 cents, on the New York Stock Exchange.