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United Technologies profit beats on Rockwell Collins boost

Stock MarketsApr 23, 2019 09:05AM ET
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© Reuters. United Technologies logo is displayed on a screen at the post where it's stock is traded on the floor of the NYSE in New York

By Ankit Ajmera

(Reuters) - United Technologies Corp (NYSE:UTX) reported a higher-than-expected quarterly profit on Tuesday, boosted by robust demand for aircraft parts at one of the producers better placed to ride out the fallout of this year's Boeing (NYSE:BA) 737 MAX groundings.

The company's shares were up 4 percent at $142.50 in early trading, after it raised the low end of its 2019 forecast for adjusted earnings per share by 10 cents to $7.80, while keeping the upper end unchanged at $8.00.

UTC, whose stock has risen 10 percent since the fatal crash in Ethiopia in March, said it is benefiting from better-than-expected performance of its recently acquired aero parts maker Rockwell Collins (NYSE:COL).

Shares of aerospace suppliers have been under pressure following the second deadly crash of a Boeing Co 737 MAX jet within five months, grounding the planes and forcing Boeing to cut production of its best-selling jets.

UTC's stock, however, has outperformed a 0.2 percent decline in the broader S&P 500 Aerospace and Defense index, due to the aerospace supplier's small exposure to the 737 MAX jets.

Sales in the unit which houses Rockwell Collins and is the company's biggest, jumped about 71 percent to $6.51 billion, as a growing fleet of aircraft boosts demand for spare parts.

Rockwell Collins, now combined with UTC's aerospace systems, makes engine components, interior and exterior aircraft lighting, aircraft seating, landing gear, wheels and brakes, and provides spare parts, overhaul and repair services.

"We made significant progress this quarter on the integration of Rockwell Collins and saw excellent performance from the combined Collins Aerospace business," Chief Executive Officer Gregory Hayes said.

UTC, which also makes Otis elevators and Carrier air conditioners, said it was on track to separate into three companies in the first half of 2020, leaving the company focused on its aerospace units through Collins Aerospace and the Pratt & Whitney engines business.

On an adjusted basis, UTC earned $1.91 per share in the first quarter ended March 31, beating analysts' average estimate of $1.71 per share, according to IBES data from Refinitiv.

The company said net sales rose 20.5 percent to $18.37 billion, and were above estimates of $17.99 billion.

United Technologies profit beats on Rockwell Collins boost

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