Elevator, jet engine and building technology maker United Technologies Corp. said Wednesday that its first-quarter net income jumped 17 percent as its revenue rose and orders climbed for all three businesses.
The results beat Wall Street expectations, and the Hartford-based manufacturer of Otis elevators, Sikorsky helicopters, Pratt & Whitney jet engines and Carrier heating and cooling systems raised its 2011 profit guidance.
United Technologies has been benefiting from rising demand for airline parts and the improving commercial and real estate markets.
But the company warned that rising oil prices and disruptions in supplies in Japan following the March 11 earthquake and tsunami could hurt its airline customers.
Its shares rose $3.54, or 4.3 percent, to $86.31.
The company's net income rose to $1.01 billion, or $1.11 per share, for the three months that ended March 31. That's up from $866 million, or 93 cents per share, a year earlier.
The latest results reflected 2 cents a share in restructuring costs. Excluding those, United Technologies earned $1.13. Analysts expected adjusted earnings of $1.04 a share, according to FactSet.
Revenue rose 11 percent to $13.3 billion from $12 billion a year ago. Analysts expected $12.8 billion.
United Technologies raised its earnings forecast for the year to $5.25 to $5.40 per share from $5.20 to $5.35 per share. Analysts had expected $5.37 per share.
Chief Executive Officer Louis Chenevert credited the stronger global economy for strength in United Technologies' markets. The company says it expects 2011 revenue to be $57 billion, the high end of its previous guidance in December of $56 billion to $57 billion. Analysts expected revenue of $57.2 billion.
United Technologies posted strong quarterly revenue gains in most of its businesses compared with the first quarter of 2010. Revenue at Pratt & Whitney was $3.1 billion, up about 9 percent. At Carrier, it rose 12 percent to $2.77 billion; at Sikorsky Aircraft, which makes helicopters used by the U.S. military in Afghanistan, it was $1.58 billion, up nearly 17 percent.
Chief Financial Officer Greg Hayes told investor analysts in a conference call that rising consumer spending is encouraging but that rising oil prices are among the "biggest threats." Rising prices in other commodities, such as copper used in manufacturing, also are putting pressure on United Technologies businesses, he said. Hayes warned that "emerging supply chain disruptions" in Japan could grow.
"While we're confident in Japan's resilience and ability to recover there likely will be some short-term supply chain disruptions in our business," he said.
From Japan, United Technologies gets such products as flash memory devices, capacitors and transistors, Hayes said. Separately, United Technologies saw about $20 million in one-time income in the first quarter from a joint venture with Toshiba in Japan, he said.
Hayes estimated earnings will slip by less than 1 cent per share because of disruptions in Japan, and he expects the company to recover that cut in the third quarter.
Analyst Rick Whittington of Sturdivant & Co. said United Technologies is benefiting from strong commercial airline business, which is more than making up for slowing military business. He cited Hamilton Sundstrand's 9 percent revenue growth in the quarter tied to commercial aviation.
"There's a lot of momentum in their core businesses," Whittington said.
He discounted Hayes' warnings about rising prices for oil and other commodities; he said those are due to improving business and higher demand.
"Asian and Middle Eastern airlines are ordering planes like crazy," Whittington said. "You're not going to see any cutbacks in orders."
Gains in aerospace and building products were already seen late last year and earlier in 2011. United Technologies last month raised the lower end of its profit guidance for 2011, saying businesses such as elevators, commercial plane spare parts and heating and air conditioning systems are doing well in the economic recovery.
In its 2010 fourth quarter, United Technologies said stronger results from Carrier and its airline commercial spare parts business for Pratt & Whitney helped boost profit.