UPDATE: Eaton 1Q Profit Up 83%; Raises Full-Year View
April 20 2011 - 10:10AM
Dow Jones News
Eaton Corp.'s (ETN) first-quarter earnings rose 83%, as the
diversified industrial company benefited from rising demand for
farm and construction machinery and a rebounding market for
commercial trucks.
Eaton reported a string of double-digit profit and sales gains
in its major business categories, allowing the company to exceed
expectations for the first quarter and giving executives the
confidence to raise their full-year earnings outlook.
Increased spending on capital equipment is translating into
elevated demand for Eaton's products. The Cleveland company
supplies electrical equipment, hydraulic components for farm and
construction equipment, aerospace systems and parts for cars and
commercial trucks.
In Eaton's hydraulics business, which supplies components to
Caterpillar Inc. (CAT) and Deere & Co. (DE), first-quarter
operating profit nearly doubled from a year ago as sales rose
40%.
"The hydraulics markets in the first quarter continued their
V-shape recovery from the sharp downturn in 2008 and 2009," said
Chairman and Chief Executive Alexander Cutler.
The company's truck business had a 96% increase in operating
income and 27% increase in sales as the commercial truck industry
snapped back following a prolonged slump in demand for trucks.
Sales volumes of heavy-duty trucks this year are expected to be
their highest since 2006.
Electrical sales in the Americas, Eaton's largest business
segment by revenue, jumped 20% from a year ago, as the unit's
operating profit rose 26%. In Eaton's aerospace business, which has
been the company's weakest in recent quarters, first-quarter
operating profit slipped 8% while sales grew 2%.
"Our margins in aerospace were impacted by increased expenses
stemming from changes in scope, programming delays and execution of
new customer programs," Cutler said. "We anticipate that margins
will likely improve by the second half of the year."
The company raised its full-year earnings estimate from February
by 15 cents a share, to $3.70 to $4 a share before acquisition
costs. It also forecast second-quarter earnings of 90 cents to 96
cents a share, excluding acquisition costs. Analysts surveyed by
Thomson Reuters expect the company to earn $3.81 a share for 2011
and 93 cents for the current quarter.
For the quarter ended March 31, Eaton had a profit of $286
million, or 83 cents a share, up from $156 million, or 46 cents a
share, a year earlier.
Excluding acquisition charges, earnings rose to 84 cents a share
from 48 cents. Sales jumped 23% to $3.8 billion. Analysts expected
the company to earn 80 cents a share on revenue of $3.65
billion.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
--Melodie Warner contributed to this article.
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