Two U.S. manufacturing bellwethers, Caterpillar and United Technologies, said on Tuesday that falling global demand for big-ticket products battered their first-quarter results.
But the companies had slightly different views of the outlook going forward. United Technologies voiced some hope for the rest of 2009 and its shares were up almost 5 percent; Caterpillar was less optimistic and shares fell nearly 3 percent.
The company, which also makes turbines and diesel engines, slashed its full-year earnings and sales forecast as well, blaming what it called the high degree of uncertainty surrounding everything from the global economic outlook to the ability of its dealers to reduce inventory.
Caterpillar said it now expects full-year earnings of $1.25 a share, before restructuring costs, on sales of $31.5 billion to $38.5 billion. Three months ago, the company forecast profit of $2.50 a share, before restructuring, on sales of $36 billion to $44 billion.
If full-year sales come in at the $35 billion midpoint of that estimate range, it would represent a 32 percent drop from 2008 and represent the worst one-year revenue decline for the Peoria, Illinois-based company since the 1930s.
UNITED TECH SEES BETTER 2010
Diversified manufacturer United Technologies Corp
But the Hartford, Connecticut-based company, which also makes Black Hawk helicopters and Otis elevators, seemed to hold out more hope that demand would begin to stabilize in the second half.
The company expects to return to profit growth next year, Chief Financial Officer Greg Hayes told analysts on a conference call.
United Tech said order trends were weak in the first quarter. But it said the rate of the year-over-year decline had stabilized across most of its businesses in March and it stood by its full-year forecast.
Profit at the company's Carrier air conditioner unit - which closely tracks construction activity -- tumbled 91 percent in the quarter on a 27 percent drop in revenue. That made it United Tech's weakest segment in the quarter.
The company seems to be managing the downturn better than expected, wrote Merrill Lynch analyst Ronald Epstein, in a note to clients.
Although Carrier's results are disappointing, we expect they have reached a bottom and should begin to improve.
That difference in outlook -- and Caterpillar's warning that it was suspending stock repurchases to preserve cash and had been authorized to issue 25 million shares -- made all the difference on Wall Street.
While Caterpillar's shares fell at the opening bell, United Tech's jumped. Caterpillar was last down 84 cents, or 2.8 percent, at $29.64. United Tech was last up $2.15, or 4.7 percent, at $47.96.
Two other smaller industrial players are reporting today: Pentair Inc
Pentair, which makes products including water filtration systems and electrical enclosures, cut its profit forecast for the rest of the year, with Chief Executive Randall Hogan citing dismal conditions in its key markets.
The Minneapolis-based company said it now expects to earn at least $1.40 a share this year. In February it said it expected $1.70 to $2.00 per share.
We believe our first-quarter earnings -- and the sales decline that drove it -- represents a low point for the company, Hogan said.
Its shares fell 5 percent to $22.19 on the NYSE.
(Writing by James B. Kelleher and Scott Malone; editing by Patrick Fitzgibbons and Dave Zimmerman)