United Technologies Profit Rises on Canada Helicopter Delay

Jan 22, 2014 4:16 pm ET

(Updates share price in fifth paragraph.)

Jan. 22 (Bloomberg) -- United Technologies Corp.’s fourth- quarter earnings beat analysts’ estimates thanks to a last- minute deal with Canada to delay delivery of eight military helicopters that would have resulted in losses.

Postponing the handover of the unprofitable aircraft produced a benefit of 6 cents a share, the company said today in a statement. Earnings from continuing operations rose 53 percent to $1.45 billion, or $1.58 a share, topping the $1.53 average estimate among 21 analysts surveyed by Bloomberg.

“We really thought the Canada situation was going to be over and done with by the end of next year, but unfortunately it looks like there’s still more to learn,” said Nick Heymann, an analyst with William Blair & Co. in New York. “The timing of the remaining deliveries could affect where profit is this year versus next.”

Chief Executive Officer Louis Chenevert is reshaping the Hartford, Connecticut-based company to focus on commercial construction and aerospace. He combined the Otis Elevator Co., Carrier Corp. and fire and security units last year after completing the purchase of Goodrich Corp. in 2012.

The shares rose 1 percent to $116.12 at the close in New York. They have climbed 33 percent in the past 12 months, compared with a 24 percent gain for the Standard & Poor’s 500 Index.

Helicopter Delays

United Technologies’ Sikorsky Aircraft Co. won a contract in 2004 to provide search-and-rescue and anti-submarine warfare helicopters to the Canadian government. The program has suffered several delays after Canada said the aircraft didn’t meet specifications. The two sides reached an agreement on Dec. 31 to negotiate new terms for the contract.

The company will lose about $14 million per helicopter going forward, Greg Hayes, chief financial officer, said on a conference call.

“I’m happy we’re engaging with the customer and making progress,” Chenevert said in a telephone interview. “This has been an ongoing challenge for the last few years and we have visibility into delivering eight aircraft in the back end of 2014.”

Revenue rose 1.9 percent to $16.8 billion, trailing the $17.1 billion average of 17 estimates compiled by Bloomberg. Sales at Otis increased 4.3 percent to $3.3 billion, while Pratt & Whitney sales rose 5.1 percent $4.1 billion.

United Technologies affirmed its forecast for annual profit of $6.55 to $6.85 a share. The company plans to repurchase $1 billion of its stock this year, down 17 percent from 2013, according to the statement. It will budget $1 billion for acquisitions, a sixfold increase from last year’s spending.

--Editors: Molly Schuetz, John Lear