ITT Sees Lower Defense Sales In 2011 Offset By Other Businesses

ITT Corp. (ITT) predicted Friday that lower sales and income from its defense segment next year will be offset by growth in its other industrial businesses.

The company has been realigning its defense business toward the aerospace market and foreign militaries, as well as expanding its non-defense portfolio of businesses, particularly in fast-growing economies overseas.

"The investments we have made position us for solid margin expansion in 2011," said Chairman and Chief Executive Steve Loranger in a written statement about the company's 2011 outlook.

The White Plains, NY., company forecast total revenue growth of 3% to 5% from 2010's revenue of about $11 billion. ITT expects earnings per share of $4.62 to $4.82 next year. Analysts anticipate the company will earn $4.62 per share next year on total revenue of $11.5 billion. ITT also affirmed its 2010 earnings guidance of $4.28 to $4.32 a share.

Defense has been the company's best-performing business segment in recent years. But the U.S. Defense Department has begun scaling back its purchases of ITT's tactical radios, jammers to block bomb detonation signals and other equipment used by U.S. troops in Iraq and Afghanistan as part of a broad reduction in defense spending. ITT expects defense segment revenue to fall 2% next year from 2010 and sees operating income from defense slipping 3%. The company expects defense segment revenue from non-military agencies and foreign armies to improve next year.

Meanwhile, the company anticipates further strengthening of sales in its other business segments, coupled with robust growth in operating income.

In ITT's fluid technology segment, which makes pumps for residential water plants and industrial processes, total revenue growth of 12% is expected next year. The segment's organic sales, which exclude revenue from acquisitions, are expected to rise about 5%. The company predicted operating income from the segment will increase 22% next year.

Revenue from ITT's motion and flow control segment, which supplies equipment and components to the automotive, marine and beverage markets, is forecast to rise about 7% next year with organic sales growth of about 5.5%. The company anticipates a 25% increase in operating income from the business as ITT leverages the benefits from pervious cost reductions and productivity improvements.

ITT's stock closed Thursday's regular trading session up 1.74%, or 87 cents, at $50.87 a share.

- -By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com

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