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United Technologies: Reaping Healthy Profits but Seeing Order Deferrals

United Technologies Corporation (UTC) held its 4th quarter conference call on Jan. 21, 2009 wherein executives presented the company’s cash flow expectations and earnings for the quarter.

As articulated by Senior Vice President and Chief Financial Officer Gregory Hayes, its 2008 revenues were just under $59 billion with earnings per share at $4.90, up 15% from 2007.

Additionally, the company generated a strong cash flow with 105% of net income and total restructuring expenditures of $357 million. In general, the company had a strong 2008 except for the U.S. residential market.

As for the 4th quarter, profits rose to 8%, with United Technologies accounting its growth to its aerospace business units, offsetting weakness in its air conditioner and elevator businesses. Profit for the 4th quarter was $1.15 billion from the previous $1.1 billion, with 4th quarter earnings per share at $1.23, which is up 14% over last year. Hayes particularly noted Sikorsky Aircraft Corporation as the quarter’s highlight, with an organic revenue growth of 25%, having delivered 204 large helicopters over the year (a 17% jump from 2007). Pratt & Whitney revenues were up 3% with organic growth of 6%.

Meanwhile, revenue eased around 1.5% to $14.5 billion, factored by the strengthening of the U.S. dollar.

Moreover, executives warned that the company might be expecting a faster rate of decline in the 1st half of 2009 as indicated by the weak 1st quarter order rates from emerging-market clients. Otis new equipment orders suffered from a global decline of 14% while the commercial HVAC equipment orders from Carrier declined by 7% worldwide.

Otis transport refrigeration orders declined by more than 50%. The company is also anticipating some holdbacks in emerging economies including China and Russia.

Executives of the Hartford, Connecticut-based firm remain positive and confident, and take pride in continuous product innovations and financial strategies. United Technologies drew its profit forecast for 2009 at $4.65 to $5.15 per share that ranges from a 5% decline to a 5% increase from the previous year.

United Technologies Corporation is a diversified multinational firm engaged in the development, research, and manufacture of high-technology products including Carrier heating and cooling; UTC Fire & Security systems; Otis elevators, escalators, and moving walkways; UTC Power fuel cells and power generation systems; industrial products; Hamilton Sundstrand aerospace systems and industrial products; Pratt & Whitney aircraft engines; and Sikorsky helicopters. The company has a centralized research facility that supports all of its business units in developing new equipment and processes. In addition, United Technologies Corporation is a large military contractor that produces missile systems and military helicopters.

United Aircraft and Transport Corporation was founded in 1929, through the merger of Hamilton Standard, Sikorsky Aircraft, Pratt & Whitney, Boeing Air Transport, Boeing Airplane Company, and Chance Vought. In 1934, the company was divided into three independent companies namely, United Aircraft, Boeing, and United Airlines. United Aircraft was later renamed as United Technologies, and then made a series of acquisitions over the years, thus becoming the conglomerate that it is now. Louis R. Chênevert is the company’s current CEO and president.