--United Tech receives regulatory clearance on its acquisition
of Goodrich Corp.
--United Tech second-quarter profit rose 0.8% amid a revenue
decline
--Company cuts its full-year outlook on slowing global economy
and late July close for Goodrich
(Updates with details on the regulatory clearance of the
Goodrich deal.)
By Victoria Stilwell
United Technologies Corp.'s (UTX) second-quarter profit edged up
0.8% and the company cut its full-year guidance, while the company
said it received all regulatory approval related its $16.5 billion
deal to acquire aircraft-components maker Goodrich Corp. (GR).
The industrial conglomerate said the acquisition, initially
announced on Sept. 21, is expected to close by the end of the week
after Thursday's conclusion of the regulatory review by the U.S.
Department of Justice and the European Commission.
The regulatory clearance requires United Tech to sell Goodrich's
electric power systems business and its pumps and engine controls
business. The company will also sell Goodrich's interest in Aero
Engine Controls, a joint venture with Rolls-Royce Holdings PLC
(RR.LN). Although the AEC aftermarket business will stay with
United Tech, Rolls Royce will have the ability to purchase the
business in the future.
The Justice Department is also requiring that United Tech extend
the term of certain contracts held by customers of Goodrich's
engine control systems business for 30 days after its divestiture
and provide supply and transition services agreements to the buyers
of divested assets to help them fulfill the obligations of the
businesses.
The department said that left alone, the acquisition would have
resulted in higher prices, less favorable contractual terms and
less innovation in aircraft components.
United Tech lowered its full-year guidance in light of the
slowing global economy and late-July close for Goodrich, now
expecting sales of $58 billion to $59 billion and per-share
earnings of $5.25 to $5.35. The company previously predicted sales
of $61 billion to $62 billion on earnings of $5.30 to $5.50 a
share. The company also said it will increase its investment on
restructuring to $500 million from $450 million.
For the second quarter, United Technologies reported a profit of
$1.33 billion, or $1.47 a share, fractionally up from a
year-earlier profit of $1.32 billion, or $1.44 a share. The
company's per-share earnings from continuing operations rose to
$1.62 from $1.41 a year earlier.
The latest period included 10 cents a share of favorable
one-time items, partially offset by 6 cents in restructuring costs.
The year-earlier period included a currency translation gain of 6
cents.
Revenue declined 4.6% to $13.81 billion.
Analysts surveyed by Thomson Reuters recently expected a
per-share profit of $1.41 on revenue of $14.45 billion.
Revenue from Pratt & Whitney rose 5.2% as profit edged up
0.7%, while revenue at the Otis unit decreased 5.2% and profit fell
12%.
Total costs and expenses dropped 4.5% to $12 billion.
Shares were recently up 2.6% at $74.40.
Write to Victoria Stilwell at Victoria.Stilwell@dowjones.com
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