By Scott Malone and Nick Zieminski
BOSTON/NEW YORK (Reuters) - A pair of top U.S. manufacturers topped Wall Street's profit expectations, as a recovering global economy drives demand for products ranging from air conditioners to truck transmissions.
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A third, Textron Inc
"We think that the rest of the year is going to be very positive," said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, New York, which holds shares in both United Tech and Textron.
The first-quarter results show that strong demand from China, India and other emerging markets had offset the disruptions to supplies of some electronic components in the wake of Japan's March 11 tsunami and ensuing nuclear crisis, Pursche said.
United Tech posted sales growth across its six divisions, whose products range from Otis elevators to Black Hawk military helicopters, and said it saw strong demand around the world.
"The global economic recovery continues to gain traction as evidenced by the momentum of our end markets," said United Tech Chief Executive Officer Louis Chenevert.
The company raised its full-year profit forecast by 5 cents to a range of $5.25 to $5.40 per share, representing growth of 11 percent to 14 percent and marking the second increase since United Tech first issued its outlook in December.
Chenevert said the company expected full-year sales at the top end of its prior forecast range of $56 billion to $57 billion.
Business investment in capital equipment has been one of the bright spots in a nearly 2-year-old economic recovery. A monthly reading of the U.S. manufacturing sector by the Institute of Supply Management has indicated expansion for 20 consecutive months.
But comparisons with a year ago are becoming harder as growth rates moderate. Analysts have noted industrial companies will put more emphasis on capital allocation strategies, including mergers and acquisitions, to drive the next stage of growth.
Shares of United Tech were up 3.2 percent at $85.00 in trading before the market opened, while Eaton gained 1.7 percent to $53.50.
EATON HIKES FORECAST
Like United Tech, Eaton Corp sounded an upbeat tone. Earnings at the maker of truck transmissions, hydraulic systems and electrical products came in at 84 cents per share, topping the 80 cents analysts had looked for, according to Thomson Reuters I/B/E/S.
The company raised its full-year profit forecast by 15 cents to a range of $3.70 to $4 per share. At its midpoint, the new outlook represents 37 percent growth.
The sector's weak spot was Textron, whose first-quarter earnings of 10 cents per share missed Wall Street's 17-cent forecast. The results reflect still-lackluster demand for its Cessna corporate jets.
But Textron held its full-year profit forecast steady at $1 to $1.15 per share, which would represent a more than tripling of earnings after an aggressive restructuring last year.
"We expect improved profitability as volumes recover," said CEO Scott Donnelly, who also noted that Cessna had recorded fewer order cancellations in the quarter.
Shares of Textron were down 2.1 percent at $25.25.
The three companies kick off a wave of earnings reports from big U.S. manufacturers. General Electric Co
The industrial sector has generally outperformed the broader market over the past year, with the Standard & Poor's capital goods industry <.GSPIC> index up 13 percent, while the full S&P 500 <.SPX> has gained 9.5 percent.
(Reporting by Scott Malone and Nick Zieminski; Editing by Lisa Von Ahn)