DOW JONES NEWSWIRES
Eaton Corp.'s (ETN) third-quarter profit plunged 39%, as cost
cuts failed to offset the impact of the auto-industry slump.
But results handily topped the company's target, with Eaton
boosting its full-year earnings view and giving an upbeat forecast
for the current quarter. The raised full-year outlook comes after
the electrical system and hydraulics maker in July slashed its view
for the year for the second-straight quarter.
Industrial manufacturers, especially those exposed to the
hard-hit U.S. automobile industry, are suffering as demand woes
linger. Eaton has cut 15% of its work force since 2008 and moved to
reduce its auto-industry exposure. Chairman and Chief Executive
Alexander M. Cutler said he expects the recovery the company is
beginning to experience will continue.
For 2009, Eaton now sees earnings, excluding items, of $2.40 to
$2.50, up from its July-lowered view of $2 to $2.20. Analysts'
latest average estimate, according to Thomson Reuters, was
$1.99.
Eaton also projected fourth-quarter earnings of $1.15 a share to
$1.25 a share, above analysts' mean view of $1.06.
Meanwhile, the company's third-quarter profit fell to $193
million, or $1.14 a share, from $315 million, or $1.87 a share, a
year earlier. Excluding restructuring and other charges, earnings
fell to $1.21 from $1.95. The company's July forecast was 90 cents
to $1 a share, above analysts' then-estimates.
Net sales fell 26% to $3.03 billion, below analysts' latest
average forecast of $3.13 billion.
Gross margin ticked up to 28.1% from 28% amid the company's cost
cutting.
Eaton's electrical business in the Americas, the company's
biggest business by revenue, saw a 15% profit drop and 20% sales
decline. Electrical sales from the rest of the world declined 28%
while global hydraulics sales dropped 34%. Earnings for the two
slumped 51% and 75%, respectively.
Eaton's shares closed Friday at $60.42 and didn't trade
premarket. The stock has risen 36% the past year.
-By Mike Barris, Dow Jones Newswires; 212-416-2330;
mike.barris@dowjones.com