United Technologies Corp. said it would use tax overhauls to repatriate at least $3 billion this year in cash parked overseas to help reduce debt from its planned purchase of aerospace specialist Rockwell Collins Inc.
The diversified industrial group has around $8 billion in overseas cash, and plans to bring back another $2 billion over the next two years as it continues the expansion of its aerospace business.
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Chief Executive Greg Hayes said the company still planned to close the $23 billion Rockwell Collins deal by midyear, despite some push back from peers such as Boeing Co. that have expressed concern about the enlarged company's negotiating clout.
"Nothing has really come up from a regulatory standpoint that surprises us here," Mr. Hayes said of the planned deal as United Technologies reported fourth-quarter results.
The addition of Rockwell Collins, the largest maker of aircraft seats and interiors, comes as United Technologies continues its ramp in production of jet engines after suffering a series of production problems which left jets parked and unable to fly.
Its Pratt & Whitney unit plans to deliver more than 1,000 engines this year, a level not seen in almost 40 years. That includes almost doubling output of the GTF engine used on Airbus SE and Bombardier Inc. jets, after delivering 374 last year.
"Much of the GTF drama seems to now be behind them," said analyst Rob Stallard at Vertical Research Partners. The shares were recently up 1%, at $137.34, having hit a high earlier in the session.
The company's Otis elevators unit continued to face intense competition in China, which offset growth in the U.S. and Europe. New equipment orders for Otis increased 1% in the quarter. Mr. Hayes said Otis business in China was "stabilizing."
The company reported a quarterly profit of $397 million, compared with $1 billion a year earlier. Per-share earnings dipped to 50 cents from $1.26, mainly because of tax-related charges. It expects to make a cumulative net cash payment of $1.5 billion through 2026 related to the new tax law.
For 2018, adjusted earnings per share are forecast at $6.85 to $7.10 -- in line with analysts' expectations -- and organic sales growth of 4% to 6%.
--Cara Lombardo contributed to this article.
Write to Doug Cameron at firstname.lastname@example.org
(END) Dow Jones Newswires
January 24, 2018 12:31 ET (17:31 GMT)
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