The Hartford, Conn.-based conglomerate (UTX) significantly lowered its full- year forecast across all its businesses, with revenue to decline in its Otis elevator and Carrier ventilation-system divisions because of the slump in commercial and housing construction.
"People are executing backlog at a slower pace," said Chief Executive Louis Chenevert during a conference call with analysts.
They're doing so because either they don't have the credit or they are cautious about the end markets they serve, he explained.
"The economic recovery previously anticipated in the second half of 2009 now appears unlikely," Chenevert said, while holding out some hope that a U.S. economic-stimulus package may help some of the company's markets by 2010.
In aerospace, United Technologies cut its expectations for new Pratt & Whitney jet-engine delivers, with double-digit reductions now forecast in its after- market services business. Hamilton Sundstrand is predicted to have flat after- market revenue growth with its industrial side declining at a percentage rate pegged in the high teens.
"It looks like 2008 was the peak for commercial and business aircraft production," Chenvert said.
As revised, United Technologies' 2009 profit target stands in a range of $4 to $4.50 a share, as opposed to $4.65 to $5.15 a share forecast in December. The updated forecast includes 30 cents to 40 cents a share for the restructuring.
Analysts polled by FactSet Research had been looking for earnings of $4.61 a share, on average.
Shares of United Technologies nonetheless climbed more than 6% to $39.98 each, in line with a rally in the wider market and helped by its cost-cutting initiatives. On Monday, the stock scraped to a 52-week low of $37.40, down 50% from last May.
Along with the updated forecast, the company said would shed 11,600 more jobs this year while taking restructuring charges of $750 million against financial results. That will take total job reductions to 18,000, the Dow Jones Industrial Average component said.
"We thought we would see some challenging conditions [in 2009], and conditions have been very challenging," Chenevert said, adding the company would maker deeper workforce cuts if needed.
The cuts, on top of earlier ones, are expected to save the company about $1 billion this year.
Also Tuesday, United Technologies said it's cut its share-repurchase target for the year to $1 billion from $2 billion.
