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(Rewrites to account for share price drop, adds further comment)
By Lewis Krauskopf
July 22 (Reuters) - United Technologies Corp posted tepid quarterly orders for its Otis elevators and Pratt & Whitney jet engines businesses, and shares of the diversified U.S. manufacturer fell nearly 2 percent on Tuesday.
The company also cut its cash flow forecast for the year, while analysts said higher-than-expected second-quarter profit was muddied by uncertainty over one-time gains and losses.
Shares of United Tech, a Dow index member whose products serve the aerospace and commercial building sectors, were off 1.9 percent in mid-day trading, while those of most rival manufacturers traded higher.
"A little bit slower order growth may have spooked some people," Edward Jones analyst Christian Mayes said. "We have had strong growth the last few quarters and it slowed down a bit."
Orders at Otis increased 3 percent but they were essentially unchanged in China, where the company is seeking to capitalize on rising urban populations.
United Tech Chief Financial Officer Greg Hayes noted that a year ago, orders at Otis had risen 39 percent in China, making for a difficult comparison this quarter.
Analysts have been concerned that a slowdown in the Chinese economy could undermine United Tech's commercial building business, which also includes air conditioners and security systems.
"The Chinese economy is cooling a little bit," Hayes said on a conference call with analysts.
At Pratt, orders for commercial spare engines slumped 6 percent, reversing course after rising 11 percent in the first quarter.
Sales at Pratt also slipped 0.9 percent. The unit is introducing a new engine expected to propel growth for years to come.
United Tech's second-quarter net income rose 8 percent to $1.68 billion, or $1.84 per share.
Analysts on average were looking for $1.71 per share, according to Thomson Reuters I/B/E/S.
"Although EPS was a beat in the quarter, we think results on an underlying basis were essentially in-line," with various one-time items clouding expectations, RBC Capital Markets analyst Robert Stallard said in a research note.
Revenue rose 7 percent to $17.19 billion.
United Tech's revenue increased 3 percent on an organic basis, which excludes sales from a helicopter agreement with Canada and net divestitures.
The company said last month that it had signed a revamped agreement to provide Canada with maritime helicopters from its Sikorsky unit, with the deal leading to higher revenue in the second quarter but also to a $438 million charge to earnings.
United Tech's aerospace components unit, UTC Aerospace Systems, was a bright spot in the quarter, with spare part orders jumping 28 percent.
United Tech projected 2014 earnings of $6.75 to $6.85 per share, raising the low end from $6.65. Analysts had already been looking for $6.86 per share.
"The Street was already near the top end of the company's guidance, and with today's (second-quarter) beat and not raising the top end of the guidance, it's a de-facto lowering of the EPS guidance for the second half," said Jim Corridore, an equity analyst with S&P Capital IQ.
The company said it now expected less than $1 billion in acquisitions for 2014, after previously projecting about $1 billion in deals. It expects to buy back $1.25 billion in shares this year, up from $1 billion previously.
At its March investor day, United Tech signaled that it would probably be more interested in bigger than smaller deals, and was more likely to make an acquisition to support its business serving commercial buildings than for its aerospace business. But executives also said at the time they did not see such a deal imminently. (Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn and Chizu Nomiyama)