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United Technologies 2Q earnings beat Street as sales grow in all major divisions

Results come as the conglomerate reviews whether to break into three separate units

United Technologies
A decision on splitting the company is likely to be made by the year end

Shares in United Technologies Corp (NYSE:UTX) shot up after it posted second-quarter earnings that handily beat Wall Street estimates on revenue growth led by its Pratt & Whitney jet engine unit and its aerospace systems business.

Sales grew in all major divisions including the Farmington, Connecticut-based conglomerate’s struggling Otis elevator division which increased sales by 7% in the period.

For the quarter ended June 2018, United Technologies reported earnings of US$1.97 per share on revenue of US$16.7bn. The consensus earnings estimate was US$1.85 per share on revenue of US$16.2bn. Revenue grew 9.3% on a year-over-year basis.

United Technologies stock shot up 2.3% to US$132.29.

“This was our fourth consecutive quarter of delivering organic sales growth of 5 percent or better, which is a result of our investments in innovation across the portfolio. Earnings and free cash flow were also strong in the quarter," said United Technologies CEO Gregory Hayes.

Raises outlook

The company bumped up its 2018 adjusted earnings outlook to a range of US$7.10 to US$7.25 per share on revenue of US$63.50bn to US$64.50bn. The company's previous guidance was earnings of US$6.95 to US$7.15 per share on revenue of US$63bn to US$64.50bn.

The current consensus earnings estimate hovers around US$7.12 per share on revenue of US$64.12bn for the year ending December 31, 2018.

“Despite some turbulence on the geopolitical environment each of our business continues to be supported by long term solid fundamentals and global macroeconomic outlook remains strong,” Hayes said in an earnings call.

Strategic review

It has been widely reported that the conglomerate, is planning a portfolio review to decide whether it will break into three separate companies. The process is tipped to begin after it closes its US$23bn acquisition of Rockwell Collins

The Wall Street Journal reported that the deal is expected to “close in the third quarter with a decision on splitting the company made by year end.”

“We are focused on closing the Rockwell Collins transaction first and while I know many of you want to talk and ask about the United Technologies portfolio discussion, we’ll defer any of those discussions until after the Collins transaction is completed mid-year,” Hayes told analysts during the earnings call.

He added that as far as the Rockwell Collins approval goes, “we have seen no change in behavior from the Chinese regulators.”

“All still very professional asking all the questions that we would expect, and we remain on track – we think second -- with second quarter, early third quarter to close on Collins and we just don't see an issue out there,” said Hayes.

Contact Uttara Choudhury at [email protected]

Follow her on Twitter@UttaraProactive 

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