Eaton Corp. (ETN) reported third-quarter earnings jumped 39% on
higher demand and margins, topping its forecast.
The diversified manufacturer has reported a string of
double-digit gains to both profit and sales on increased demand for
its auto, truck and hydraulic products. As such, it has steadily
increased earnings expectations.
It did so again Wednesday, raising its 2010 profit forecast
range to $5.45 to $5.55 a share from $4.90 to $5.10. It forecast
$1.55 to $1.65 a share profit for the fourth quarter. Analysts'
average expectation was $1.37, according to Thomson Reuters.
Eaton said demand from customers has been stronger than
anticipated, especially outside the U.S.
The better demand comes even as the Federal Reserve reported
Monday that U.S. industrial output fell last month for the first
time in more than a year, among the recent signs the manufacturing
boom that has helped bolster the economy is subsiding.
Eaton reported a profit of $268 million, or $1.57 a share, up
from $193 million, or $1.14 a share, a year earlier. Excluding
acquisition charges, earnings rose to $1.60 from $1.21 as revenue
increased 18% to $3.57 billion.
The company in July estimated earnings of $1.30 to $1.40 on
revenue of $3.38 billion to $3.45 billion, above analysts'
then-expectations.
Gross margin rose to 30.6% from 28.1%.
Electrical sales in the Americas, Eaton's biggest segment by
revenue, climbed 15%, but the unit's profit dipped 0.7%. Electrical
sales in the rest of the world were up 9.4% and earnings surged
80%. Another strong segment was hydraulics, where profit quadrupled
as revenue climbed 39%.
Shares closed Tuesday at $83.41 and were inactive premarket. The
stock is up 31% this year.
-By Yogita Patel and Kevin Kingsbury, Dow Jones Newswires;
212-416-2262; yogita.patel@dowjones.com