United Technologies Soars Most Since 2009 on Aerospace Strength

(Bloomberg) -- United Technologies Corp. jumped the most in almost a decade as the maker of jet engines and cockpit displays said the growing aviation market will fuel profit gains in 2019.

The upbeat forecast accompanied a report on fourth-quarter earnings that crushed Wall Street’s expectations. “It’s the culmination of the investments we have been making, especially on the aerospace side,” Chief Executive Officer Greg Hayes said Wednesday on a conference call with analysts.

United Technologies Soars Most Since 2009 on Aerospace Strength

United Technologies is counting on a lift from aviation, which is increasingly central to its operations after Hayes late last year wrapped up the long-delayed $23 billion purchase of aircraft-parts maker Rockwell Collins Inc. He now plans to shed the company’s elevator and air-conditioner businesses through a three-way split.

Adjusted earnings will be $7.70 to $8 a share this year, the company said in a statement. The midpoint topped the $7.78 average of analyst estimates, even as the manufacturer cited adverse currency effects and a higher tax rate.

Investors should be encouraged by the company’s “solid” forecast, Deane Dray, an analyst at RBC Capital Markets, said in a client note. With an organic sales-growth outlook of 3 percent to 5 percent, United Technologies “is not baking in any global slowing.”

The shares surged 5.4 percent to $117.04 in New York, the biggest gain since April 2009. United Technologies fell 17 percent last year, slightly worse than the 15 percent drop in a Standard & Poor’s index of industrial companies.

Earnings Beat

Fourth-quarter adjusted profit rose to $1.95 a share. That topped the highest analyst estimate in a Bloomberg survey and easily surpassed the average prediction of $1.53. Sales of $18 billion beat expectations amid gains in all four divisions.

The growing aviation market gave a substantial boost to the company’s aircraft-parts businesses. Sales at Collins Aerospace Systems, the parts maker that includes Rockwell Collins, surged 29 percent, while revenue for the Pratt & Whitney jet-engine business jumped 24 percent.

For 2018, sales rose 8 percent, excluding the effects of currency and portfolio changes, which marks the “best year in over a decade for organic growth,” Hayes said.

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