By Scott Malone
United Tech, the world's largest maker of elevators and air conditioners, reported fourth-quarter earnings that met Wall Street's expectations and stood by its 2009 profit forecast, which allows for earnings to be anywhere from up 5 percent to down 5 percent.
But its chief financial officer warned the first half will be tougher than it had expected, as it faces weaker market conditions and higher pension expenses.
"Clearly the first half is going to be lower than 5 percent down," said Greg Hayes, chief financial officer, on a conference call with investors and analysts. "We still expect modest recovery in the latter part of 2009."
The company feels "a sense of urgency" to restructure quickly in the face of the downturn, Hayes said. United Tech plans to run up about $150 million in restructuring expenses as it cuts headcount, he added, without specifying how many workers would lose their jobs.
SPX Chairman and Chief Executive Chris Kearney said the maker of cooling towers for electric plants and equipment used in oil and gas production would cut at least 400 more jobs this year, bringing its total reductions over 2008 and 2009 to 1,700 people or about 10 percent of its staff.
"As we look at other businesses, there will be some additional job cuts that will match declining end-markets in certain businesses," Kearney said in an interview.
Many U.S. companies are slashing jobs in the face of a prolonged recession. On Tuesday, fellow manufacturer Eaton Corp <ETN.N> said it would lay off 5,200 workers.
Both SPX and United Tech generate more than half their sales outside the United States, and the dollar's rise in value of the past few months has hurt their results.
While foreign sales, particularly to the developing world, have helped to boost them even as the U.S. economy slowed, that may change, one analyst said. That could take a toll on United Tech's Otis elevator and Carrier air conditioner units.
"We expect commercial construction weakness to spread from the U.S. into emerging markets," wrote Citigroup analyst Jeffrey Sprague, in a note to clients. "Otis and Carrier could be exiting 2009 weaker than they enter."
A leading indicator of U.S. nonresidential construction activity rose slightly last month but remains near historic lows amid scarce credit, an architects' trade group said on Wednesday.
BY THE NUMBERS
Hartford, Connecticut-based United Tech's fourth-quarter earnings came to $1.15 billion, or $1.23 per diluted share, up 8 percent from $1.1 billion, or $1.08 per share, a year earlier. The result matched analysts' average forecast of $1.23 per share, according to Reuters Estimates.
The company maintained its 2009 profit per share forecast of $4.65 to $5.15.
Charlotte, North Carolina-based SPX set a 2009 profit target that allows for up to a 15 percent drop from forecast 2008 earnings, as it expects a slowing global economy to pound down revenue 7 percent to 12 percent.
The manufacturer expects to earn $5.40 per share to $5.80 per share from continuing operations in 2009.
That was not as grim a view as Wall Street had feared. Analysts had looked for 2009 profit of $5.36 per share, down from an expected $6.36 per share in 2008, according to Reuters Estimates. SPX is due to report 2008 results February 25.
Shares of SPX rose 10 percent, or $4.06, to $42.94, while United Tech fell 3 percent, or $1.42, to $47.94. Both trade on the New York Stock Exchange.
Elsewhere in the sector, shares of General Electric Co <GE.N> touched a fresh 12-year low after two more brokerages said the U.S. conglomerate's top-shelf credit rating may be at risk and warned GE might have to cut its dividend.
Shares of GE, which is due to report quarterly results on Friday, were down 3 percent, or 39 cents, at $12.54 on the NYSE after earlier falling as low as $12.24, its lowest point since early 1996.
(Reporting by Scott Malone; additional reporting by Nick Zieminski in New York; Editing by Derek Caney and Gerald E. McCormick)