What Can We Expect From United Tech’s Q3 Earnings?

by Trefis Team
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United Technologies (NYSE: UTX) is all set to report earnings for Q3 on October 24. The company has had a pretty strong year so far. It managed to beat earnings in the last two quarters, while securing notable increases in revenues. In general, the company’s diversified business mix, coupled with a wide geographical presence, allows it to remain profitable even when macro economic conditions work against most businesses. At the moment, United Technologies is well positioned for future growth thanks to its robust backlog and strategic cost-reduction efforts. We can expect the company to continue this momentum through 2017.

Additionally, given the commendable performance thus far, management has decided to raise the bottom end of the guidance for the full year. The company now expects revenues to come in around $58.5-$59.5 billion, up from $57.5-$59.5 billion, while earnings come in around $6.45-$6.60, up from the previous range of $6.30-$6.60.

Points To Note:

  • The key to Pratt & Whitney’s future is its Geared Turbofan (GTF) engine. However, the program has witnessed quite a few problems since its inception, and is causing quite a stir among its customers.
    • In the previous year, Pratt & Whitney was supposed to deliver 200 engines, however, the segment could only deliver 138 engines.
    • In the current year, it’s supposed to deliver about 300-400 engines. It is imperative that the company makes its targets this time, otherwise they could see themselves losing significant chunks of business to GE’s LEAP engine.
    • Hopefully, the upcoming earnings call will have good news regarding the current status of the program.
  • Otis has suffered significantly in China over the last few quarters. That said, UTC is determined to turn things around in the region. So far in the year, the segment has worked hard to improve its unit equipment orders here. Despite falling sales figures, the segment has managed successfully to improve order numbers in Asia’s biggest market, as it emerges from tough pricing conditions. However, one needs to wait and watch. The jump in the unit equipment orders number could merely be a function of the Chinese economy in the first half. The Q3 results will shed more light on the situation.
  • Lastly, over the quarter, the company announced its plans to acquire Rockwell Collins for a whopping $30 billion, making it the biggest acquisition in aerospace history. Despite the seemingly clear advantages of the acquisition, UTC has come under immense fire from industry experts and existing customers alike. We can expect to learn more about this on the upcoming earnings call.

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