United Technologies Raises Targets, Waits on Rockwell Merger --2nd Update
23 Octubre 2018 - 11:10AM
Noticias Dow Jones
By Thomas Gryta
United Technologies Corp. sought to reassure investors that its
core businesses are performing well even as the company's $23
billion takeover of Rockwell Collins Inc. hangs in regulatory
limbo.
The conglomerate, which makes Pratt & Whitney jet engines
and Otis elevators, said Tuesday its third-quarter profit dropped
7% as higher costs offset a 10% jump in revenue. Excluding
acquisitions, the company said organic sales rose 8% from a year
ago.
United Technologies raised its financial targets for the rest of
its fiscal year. Chief Executive Greg Hayes said he expects the
Rockwell Collins deal to "happen shortly" and that he doesn't see
any drama in the deal's review in China. On a conference call
Tuesday, he said the deal should close in two to six weeks.
The year-old deal received U.S. regulatory approval earlier this
month, but remains under review by Chinese authorities. The delays
have stoked speculation that the transaction's approval could
become entangled in trade tension between the U.S. and China.
The company hasn't heard anything from Chinese regulators "that
would cause us to believe there is any political issues that is
holding up approval on our deal," Mr. Hayes said.
He said the approval from the Justice Department came later than
expected, which delayed the Chinese review process.
"Bottom line, we are still within our expected timing range for
China," he said. UTC had said in mid-September that it still
expected the deal to close in September. In May, Mr. Hayes said the
acquisition should close in June or July.
Mr. Hayes said the delay hasn't slowed work on its portfolio
review, in which it will decide on splitting into separate units.
He said he expects to reveal the results of the review by
mid-November, but that the board won't make a final decision until
the Rockwell Collins deal is closed. United Technologies owns one
of the world's biggest jet-engine makers, Pratt & Whitney,
along with Otis elevators and Carrier air conditioners.
The review isn't complete, but Mr Hayes said the outcome "will
not surprise anyone" and stressed his preference for a breakup.
"I've made my views clear, I think focused businesses tend to do
better over the long term," he said. The decision to separate would
mean exploring all options including selling businesses.
He said some businesses like Otis and Climate Controls &
Security might be hard to sell because of antitrust concerns for
many buyers.
United Technologies boosted its 2018 adjusted earnings outlook
to a range of $7.20 to $7.30 a share, up from a previous view of
$7.10 to $7.25 a share. It also raised the low end of its 2018
sales projection by $500 million and now expects $64 billion to
$64.5 billion. Its free cash flow goal of $4.5 billion to $5
billion is unchanged.
Analysts expected 2018 earnings of $7.23 on revenue of $64.6
billion.
Third-quarter net income slipped to $1.24 billion, from $1.33
billion a year earlier. The results were weighed down by
restructuring charges. Total revenue rose to $16.51 billion, up
from $15.06 billion a year ago. Both profit and sales exceeded Wall
Street's expectations.
The company's Otis elevator division continued to struggle as
business slowed in South Korea. In China, Otis reported sales rose
for the first time since 2015 and prices are stabilizing on new
orders.
Otis sales rose for the quarter, but operating profit fell.
Margins dropped more than two percentage points as material and
labor costs rose. UTC will look at "structural actions," including
facility closures, if results don't show expected improvement in
6the fourth quarter.
United Technologies' shares rose 1.6%, to $128.45, in
late-morning trading.
Write to Thomas Gryta at thomas.gryta@wsj.com
(END) Dow Jones Newswires
October 23, 2018 11:55 ET (15:55 GMT)
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