By Ted Mann and Tess Stynes
United Technologies Corp. said customers of its Carrier heating
and cooling business were busy in the first quarter despite frigid
weather conditions, suggesting growing strength in the U.S. housing
market.
Greg Hayes, United Technologies' chief financial officer, said
Carrier's residential business has historically been a good
indicator about the state of the U.S. housing market. In 2007,
Carrier's sales sunk, foreshadowing the coming housing bust. "Here
it is 2014 and it's going the other way, so we feel pretty good
about the U.S. economy," Mr. Hayes said in an interview.
Carrier's U.S. orders for heating and cooling systems were up
19% for the first three months of the year from a year ago, helping
United Technologies notch a 2.4% increase in sales to $14.7
billion. Earnings fell 4.2% to $1.2 billion, dragged down by
restructuring-related expenses.
In the first quarter, United Technologies shouldered costs from
closing a San Diego plant making auxiliary power units for its
Pratt & Whitney jet-engine business and another factory in
Italy that manufactured air-conditioning equipment for Carrier.
Each carried restructuring costs of more than $40 million for the
quarter, part of a total restructuring expense of $125 million.
In the past few years, United Technologies Chief Executive Louis
Chênevert has been working to focus the company to consolidate its
operations into two areas where it supplies parts--aerospace and
building systems. In the process, Mr. Chênevert has shed unrelated
assets such as wind power while acquiring businesses to bolster his
aerospace and building-systems operations.
In the latest period, new-equipment orders at its Otis elevator
business increased 9% from a year earlier, led by a 27% growth in
China. Large commercial-engine-spares orders rose 11% at Pratt
& Whitney and commercial-spares orders increased 9% at UTC
Aerospace Systems.
For the year, the company raised the lower end of its per-share
earnings estimate and affirmed the company's sales projection of
$64 billion, citing continued organic growth and orders strength.
United Technologies shares rose 1.3% in afternoon trading to
$119.86.
The company said its Sikorsky helicopter unit reached a new
agreement with the Canadian government over a troubled and delayed
maritime helicopter contract signed initially a decade ago. Final
terms are still being negotiated, Mr. Hayes said on the conference
call, and United Technologies expects to take a charge related to
the program that has already cost the company $1 billion.
Meanwhile, Mr. Hayes said the company wouldn't do any big
acquisitions this year, focusing instead on deals under $1 billion
in the building systems side of the business. He said bigger
transactions should be seen as a long-term goal.
"I'm not in a hurry to spend the shareowner money on deals just
to grow, " he said citing high equity prices and demands for high
premiums. "We don't need to buy growth."
Write to Ted Mann at ted.mann@wsj.com and Tess Stynes at
tess.stynes@wsj.com
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