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United Tech profit beats forecasts on aerospace jump

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Like other major manufacturers in the United States, UTC, a manufacturer of aircraft engines Pratt & Whitney, Carrier air conditioners and Otis elevators, benefited from the air traffic boom and record global sales of commercial aircraft.

Revenue growth of 24% and 29%, respectively, for Pratt & Whitney and parts manufacturer for aircraft Rockwell Collins, heralds a good planned division next year, reducing the company to its main aerospace business and highlighting the rest.

"We are seeing truly steady trends in the aerospace industry with continued growth (air traffic) and an increase in production on both Boeing and Airbus aircraft,” said Greg Hayes, CEO.
Investors met the plan to split into three parts with skepticism, when it was made public last November along with the completion of Collins’s purchase. Since then, stocks have fallen by 14 percent.

Wednesday results raised shares by 7.4 percent.

Analysts say that good results and a full-year outlook are likely to increase confidence in UTC's ability to improve cash generation and profits ahead of the collapse next year.

"Expectations were low, stocks did not justify themselves, and we believe that street forecasts for 2019 (earnings per share) should increase by 5–10 cents,” said Nigel Coe, analyst for Wolfe Research.

The company predicts adjusted earnings per share in 2019 between $ 7.70 and $ 8.00, the midpoint of which significantly exceeds the average price of $ 7.80, according to IBES data from Refinitiv.

Collins' contribution to earnings in 2019 is currently expected to be 35 cents per share, compared with 15-25 cents per share earlier, largely due to better operating efficiency.

The company expects sales growth in 2019 in the range from low to high single digits in all directions.

While Otis has suffered in the past from demand-related problems in China, the company said that the ongoing infrastructure spending by the Chinese government will help Otis, as well as Carrier, in the upcoming quarters.

"We believe that the government’s attention to infrastructure spending will help the market as a whole. It is in their interest to try to achieve a growth in gross domestic product above six percent, ”said financial director Ahil Johri.
On an adjusted basis, United Technologies earned $ 1.95 per share, up from $ 1.53.

Net sales grew by 15.1 percent to $ 18.04 billion, surpassing estimates of $ 16.91 billion.


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