United Technologies profit beats forecasts; buyback, restructuring planned
By Lewis Krauskopf
(Reuters) - United Technologies Corp (UTX.N: Quote) reported a drop in third-quarter profit that still beat analyst expectations, and its chief executive said the industrial manufacturer would announce a significant restructuring before the end of the year.
The U.S. aerospace and building systems conglomerate also revealed plans on Tuesday to buy back $12 billion of its stock, sending its shares up 4.9 percent to $96.51 in afternoon trading.
"Significant additional restructuring actions" will be announced in the fourth quarter, Chief Executive Greg Hayes told analysts on a conference call. "We have seen some opportunities to do some longer-term structural cost reduction."
The company will seek to cut overhead costs, but the focus will be on "factory rationalization," Hayes said.
He said the company would provide more details in December.
Edward Jones analyst Jeff Windau said there were likely restructuring opportunities "across the board," while noting that United Technologies' commercial buildings segment had faced challenges in China and Europe.
"They’re trying to do what they usually do which is aggressively control costs, and maybe they’re doubling down in that respect to manage to a higher earnings figure," said Moody's analyst Russell Solomon.
The company backed its 2015 profit forecast, after cutting it three times earlier in the year, which had driven the stock down some 20 percent this year through Monday. Continued...