United Technologies Corp. posted a 19 percent jump in its second-quarter profit on Wednesday, citing strong orders for its heating and cooling building systems and exports that got a lift from a weaker dollar.
The results from the Hartford company that owns Carrier heating and cooling, Otis elevator, jet engine manufacturer Pratt & Whitney and other businesses beat Wall Street estimates.
The company also raised its outlook for the full year.
Chief Executive Louis Chenevert said in a statement that he was pleased that orders are strong at the commercial construction segments, which points to future strength because the work is planned years in advance.
"More encouragingly, order rates remain strong and in line with expectations across most of the segments including our longer cycle commercial construction-related businesses," he said.
But its shares dropped $1.60, or 1.8 percent, to close at $87.22 Wednesday.
Matt Collins, an analyst at Edward Jones, said the lower share price reflects the loss by Pratt & Whitney's next-generation geared turbofan engine in the most recent round of announced airline orders.
American Airlines said Wednesday it will buy 200 planes from Boeing's 737 family of single-aisle planes, with deliveries starting in 2013. Half are expected to be equipped with updated, more fuel-efficient engines.
For Pratt & Whitney, "that closes that door for at least another five, 10 years when it can get back on the 737," Collins said.
Chief Financial Officer Greg Hayes told analysts on a conference call that United Technologies was unable to compete because Boeing has an exclusive agreement with CFM, a joint venture between General Electric and Safran "and until we have a new aircraft with the Boeing Co. for the 737, we are probably not going to have an opportunity."
The company reported its net income rose to $1.32 billion, or $1.45 per share, for the April-June quarter, from $1.11 billion, or $1.20 a share, a year ago.
It was the sixth consecutive quarter of double-digit profit increases.
Revenue rose 9 percent to $15.08 billion from $13.8 billion a year ago. Orders increased at Otis, Pratt & Whitney and aerospace parts maker Hamilton Sundstrand.
Analysts expected earnings of $1.41 a share on revenue of $14.61 billion
United Technologies raised its 2011 outlook to between $5.35 per share and $5.45, up from $5.25 to $5.40. It also raised its revenue estimate for the year to $58 billion from $57 billion.
Analysts expected full-year earnings of $5.43 a share on revenue of $57.7 billion.
Each of United Technologies' six businesses reported revenue gains in the latest quarter, with Otis at the head, posting a 12 percent rise to $3.19 billion.
Commercial spare part orders at Pratt & Whitney's large engine business grew 23 percent and orders rose at Hamilton Sundstrand by 25 percent.
New equipment orders at Otis were up 23 percent, which included favorable foreign exchange of 8 percentage points. Commercial equipment orders at Carrier grew 13 percent, including favorable foreign exchange of 4 points.
When the U.S. currency is weaker, revenue that companies get in foreign currencies translates into more dollars. About 60 percent of United Technologies' $54.3 billion in revenue last year was from sales outside the United States.
Analyst Rick Whittington of Sturdivant & Co. said that although United Technologies' defense spending has peaked after seven or eight strong years, large airline orders will keep Pratt & Whitney and Hamilton Sundstrand busy for years.
"Their growth, especially in emerging regions, will blow right through the headlines in the U.S. and Europe," Whittington said.
United Technologies reported $5.4 billion in cash at the end of the quarter, up nearly 22 percent from the first quarter. Hayes said United Technologies has not yet found businesses to acquire and will spend less than the $1.5 billion it's set aside, he said. The company will target cash by spending more than the $2.5 billion it initially planned for share buyback, Hayes said.
But he said the conglomerate still has "an appetite" to buy.
Stephen Singer can be reached at http://twitter.com/Stephen101x