Markets

United Tech sales up 2.7 percent amid engine issues, weak markets

Reuters




(Adds details about Airbus delays)
    By Alwyn Scott and Ankit AjmeraJuly 25 (Reuters) - United Technologies Corp <UTX.N>, maker
of Otis Elevators, Pratt & Whitney engines and Carrier air
conditioners, on Tuesday reported a 2.7 percent rise in
quarterly revenue, helped by higher sales in three of its four
business units.
    The organic revenue growth, which excludes foreign exchange
and acquisitions, prompted the company to raise its forecast for
full-year sales. It also lifted the low end of its range for
adjusted earnings.
    But the company reported narrowing profit margins and
slowing sales in some regions as it tries to sell elevators amid
tough economic conditions in China and increases production of
the Geared Turbofan aircraft engines.
        Engine losses are expected to peak next year, Chief
Executive Officer Greg Hayes said on a conference call. Engine
makers typically lose money on their initial production until
they reduce costs.
    The company plans to reduce factory space and flatten its
organizational structure to cuts costs this year and next, Hayes
said. Moves by Boeing <BA.N> and Airbus <AIR.PA> to capture more
of the market for airplane parts and service could prompt United
Technologies to raise prices for those parts, he said.
[nL1N1KG0HO]
    Boeing has launched a services unit that aims to capture $50
billion in profitable aftermarket sales, a market currently
served mostly by suppliers. [nL8N1JI6IM]
    United Technology shares were down 2.5 percent to $120.08.

    TOPS ESTIMATES
    United Technologies beat expectations for quarterly revenue
and profit in the latest quarter, and said it had solved a
supply chain problem with the Geared Turbofan engines that had
caused Airbus to delay deliveries of the new A320neo aircraft.
    Pratt retested some engines in the second quarter, but still
plans to deliver 350 to 400 this year. "It did cause a problem
to Airbus, no doubt," Chief Financial Officer Akhil Johri said
in an interview. Now, however, "our production issues are pretty
much in control."
    A person familiar with Airbus production plans indicated
that problems persisted. "We know what the fix is, but the time
it takes to put it in place keeps unraveling," the source said.
"A wave of airplanes keeps getting pushed back each month, which
makes it harder to eat into the earlier delays," he added.
    Another industry source said some airlines were refusing to
take delivery of Airbus A320neo aircraft because not enough
spare engines were being made available.
    Airbus declined to comment.
    Pratt built 145 engines in the first half, seven more than
in all of last year, and delivered 134.
    Net income rose to $1.44 billion, or $1.80 per share, in the
quarter, from $1.43 billion, or $1.71 per share, a year earlier.
    Adjusted earnings rose to $1.85 per share, up from $1.82.
Analysts expected $1.78, according to Thomson Reuters I/B/E/S.
    Net sales rose to $15.28 billion from $14.87 billion.

 (Reporting by Alwyn Scott in New York and Ankit Ajmera in
Bengaluru and Tim Hepher in Paris; Editing by Amrutha Gayathri
and Jeffrey Benkoe)
 ((ankit.ajmera@thomsonreuters.com; within U.S. +1 646 223 8780,
outside U.S. +91 80 6749 3067; Reuters Messaging:
ankit.ajmera.thomsonreuters.com@reuters.net))

Keywords: UTC RESULTS/ (UPDATE 3)






Leave a Reply

Your email address will not be published. Required fields are marked *

17 − fourteen =