January 24, 2018 / 11:20 AM / a year ago

United Tech's forecast lifted by buoyant commercial jet market

(Reuters) - U.S. manufacturer United Technologies Corp (UTX.N) reported better-than-expected quarterly revenue and forecast higher profit for the full year on Wednesday, benefiting from a record year for the commercial jet market.

FILE PHOTO - United Technologies logo is displayed on a screen at the post where it's stock is traded on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 5, 2017. REUTERS/Brendan McDermid

Boeing Co (BA.N) said earlier this month it delivered an industry-record 763 jetliners in 2017, and both it and European rival Airbus (AIR.PA) reported gross orders for more than 1,000 planes last year.

Sales in United Technologies’ Pratt & Whitney unit, which makes aircraft engines, were up 11.7 percent, while aerospace systems sales, which include engine parts and aircraft lighting, rose 5.7 percent.

Even as it gains from the surge in aircraft demand, the company is trying to speed up production of its fuel-saving turbofan engines that power Airbus’ newest narrow-body jet, the A320neo, and Bombardier’s CSeries aircraft.

The production ramp is expected to result in $1.1 billion worth of engine margin losses in 2018, the company said.

The company, which also makes Otis Elevators, forecast full year adjusted earnings in the range of $6.85 to $7.10 per share, up 3 percent to 6.8 percent from a year earlier. The midpoint of that range came in slightly below analysts’ average estimate of $7.00 per share.

Its sales forecast of $62.5 billion to $64.0 billion, while analysts’ were expecting $63.08 billion, according to Thomson Reuters I/B/E/S.

The company’s shares, up 23.3 percent in the past 12 months, were little changed at $135.75 in premarket trading.

Chief Financial Officer Akhil Johri told Reuters on Wednesday that the company expects to quickly repatriate $2 billion in overseas cash under the new U.S. tax law.

The latest quarter included a 90-cent charge related to the new U.S. tax law. UTC expects to make net cash payment of $1.5 billion through 2026, and use the tax windfall partly to reduce borrowing for its acquisition of Rockwell Collins COL.N.

For the fourth quarter, net sales rose 7 percent to $15.68 billion, topping Wall Street’s expectation of $15.40 billion.

The company’s income from continuing operations attributable to common share owners fell to $397 million, or 50 cents per share in the fourth quarter ended Dec. 31, from $1.01 billion, or $1.26 per share, a year earlier.

On an adjusted basis, UTC earned $1.60 per share, higher than the $1.56 per share expected by analysts.

Reporting by Ankit Ajmera in Bengaluru and Alwyn Scott in New York; Editing by Saumyadeb Chakrabarty

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