UTC Bucks Trends And Is Positive For Next Year
United Technologies Corporation (UTC) released is most recent quarter of earnings this week. In 2009 the company saw a decline in profits of about sixteen percent. Overall the company expects 2009 revenues to be around $54 billion.
UTC is the parent company of Sikorsky and Pratt & Whitney (P&W) and obviously has a great deal invested in the U.S. defense budgets. They deliver UH-60 and CH-53 helicopters as well as engines for a variety of combat aircraft. Due to the operations in Iraq and Afghanistan business has been doing fairly well. The company like a lot of the large defense contractors though has to face the fact that there might be declines in the future U.S. budget affecting the company's future.
The company's management is positive for next year though a great deal of this due to cost cutting done over the last several months. UTC shed about 15,000 jobs this past year. UTC is also looking to save money by moving some of its P&W production out of Connecticut and to lower cost states and countries.
The company though unlike some other contractors is upbeat about 2010. The belief is that there cost cutting as well as robust Sikorsky sales will help increase over seven percent. Recently EADS (EADS.P), the parent company of Airbus, for example said the current situation is so unsettled that they would not provide guidance for the end of 2009 let alone 2010.
UTC is quite diverse relying not only on their defense sales but a group of commercial companies as well. If the U.S. economy does come out of the recession next year then those parts of the company will do well too further improving revenue and earnings.
The U.S. defense budget is a little unsettled right now with the full 2010 appropriations bill sitting in Congress still as well is the commercial aircraft market. This is weighing on companies like Boeing (BA) and Lockheed Martin (LMT) as people wait to see what is funded and to what level. The company continues to benefit for example with the end of the VH-71 program as Sikorsky provided and maintains the existing fleet of aircraft used to move the President around.
UTC has some of the same issues but overall looks well positioned for the next few years which is a great improvement over a few years ago where a nasty strike at Sikorsky disrupted production and revenue.