United Technologies Corp. CEO Louis Chenevert is standing firmly behind the Hartford conglomerate’s 2009 earnings guidance.
Chenevert told investors and analysts at a presentation this week that parent of jet engine maker Pratt & Whitney, Otis elevator, Sikorsky Aircraft and other businesses, expects earnings this year to be $4 to $4.20 per share, excluding the impact of gains or restructuring costs.
Analysts surveyed by Thomson Reuters expect $4.07 per share, on average.
Chenevert said he expects UTC to resume earnings growth next year, with benefits seen from stimulus spending in China.
“I’m highly confident that we’ll resume earnings growth in 2010,” he said.
New equipment orders in China for Otis are still declining, but not as steeply as before, he said. Orders so far in the third quarter have fallen in the “mid-teens,” down from about 40 percent, he said.
Business for heating, ventilating and air conditioning equipment manufactured by Carrier also is showing a “slight improvement” in U.S. residential markets, Chenevert said.
And Carrier’s refrigerated truck business is improving in the U.S. and Europe, he added.
Analyst Rick Whittington of JSA Research Inc. said Chenevert’s forecast for earnings growth next year is unusual among chief executives.
“He was emphatic. I think it’s an encouraging sign,” he said. “He could have been more guarded.”
However, Chenevert said he expects persistent problems in commercial construction, which will have an impact on Carrier, and the airline industry, which will continue to hurt Pratt and Whitney and aerospace subsidiary Hamilton Sundstrand.
Chenevert renewed UTC’s pledge to seek acquisitions, though he said sharply lower share prices in the past year have made potential sellers reluctant to make a deal.
“I like the portfolio that I have a lot,” he said. “There’s not a need to go fix something near term. There’s a need to go add on to the core as we’ve done. A lot of players are still hung up with their 52-week high and I think that’s why the dynamic has not come together at this point.”
UTC has set aside $2 billion for acquisitions and spent $200 million in the first half. It expects to spend $500 million in the third quarter, Chenevert said.
The company announced last month that its fire and security business increased its stake in GST Holdings Ltd. a Chinese fire alarm company. UTC Fire and Security said its ownership is now more than 95 percent of the shares of GST Holdings Ltd., which Chenevert said will give UTC a “great footprint in China” and is expected to add $200 million in sales next year. (AP)