HARTFORD, Connecticut — The chief executive officer of United Technologies Corp. warned investment analysts Tuesday to not expect double-digit earnings growth this year because of a strong dollar that's making exports more expensive and pension funding.
But CEO Gregory Hayes said order rates at key businesses position the aerospace and building systems conglomerate for "significant earnings growth" in the next five years.
The Hartford, Connecticut, company expects full-year earnings at $6.85 to $7.05 per share and revenue of $65 billion to $66 billion. Earnings growth this year is expected at 1 percent to 3 percent.
"The fact is earnings are not going to grow anywhere near 10 percent this year because of the significant headwinds of FX and the pension," he said. "Our goal is to return the business to 10 percent growth."
Analysts surveyed by FactSet expect earnings of $7 per share on revenue of $65.1 billion.
United Technologies expects organic growth from its established businesses of between 6 percent and 8 percent at jet engine manufacturer Pratt & Whitney in the next five years, 5 percent to 7 percent at UTC Aerospace Systems and 4 percent to 6 percent at its building and industrial systems.
Sikorsky, which United Technologies has said may not fit with the conglomerate's portfolio and may be sold or spun off, still has strong growth prospects, Hayes said. Sikorsky revenue has fallen due to lower oil prices that have led to reduced helicopter business shuttling workers to offshore platforms.
United Technologies' aerospace businesses are benefiting from a "very, very solid backlog" and long-term prospects of service and maintenance, he said.
On the building systems side of United Technologies' business, Hayes said new equipment orders at Otis have increased 9 percent in the past five years "giving us hope that the worldwide recovery is not far away," Hayes said.
United Technologies continues to seek acquisitions, but prospective purchases must be part of the conglomerate's core business, yield more than 10 percent in internal rate of return and add to profit by the second year, Hayes said.
Those conditions and high valuations make it difficult "to do deals in today's marketplace," he said.
Mergers and acquisitions this year in "smaller deals primarily outside of the U.S." will amount to more than $1 billion, Hayes said.
United Technologies shares rose 63 cents to #119.14 in afternoon trading Tuesday. Its shares are up 3.6 percent over the past year.
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