Eaton 3Q profit falls 5 pct on lower demand
CLEVELAND (AP) — Diversified manufacturer Eaton Corp. said Wednesday its third-quarter net income fell 5 percent, as slower economic growth reduced demand for its products.
The company, which makes parts and technology used in the aerospace, auto, power and other industries, also said growth this year will be slower than it had anticipated and issued a weak revenue prediction for the current period.
But its shares got a boost from optimism that reconstruction efforts following Superstorm Sandy will increase demand for its products. In afternoon trading, Eaton stock rose $1.78, or 4 percent, to $46.90.
The Cleveland-based company earned $345 million, or $1.02 per share, in the three months through Sept. 30, down from $365 million, or $1.07 per share, in the same quarter last year. Excluding one-time charges related to acquisitions, the company said it posted an adjusted profit of $1.07 per share for the recent quarter.
Revenue fell 4 percent to $3.95 billion from $4.12 billion.
The results fell short of Wall Street predictions. Analysts, on average, expected a profit of $1.09 per share on $4.21 billion in revenue, according to a FactSet poll.
Eaton attributed the shortfall to Europe, which has been struck by a financial crisis, weaker growth in China and moderating industrial activity in the U.S. due to uncertainty over moves the government might make on taxes and spending.
For the current quarter, Eaton said revenue will be about the same as in the third quarter, excluding any effects from its pending $11.5 billion acquisition of Cooper Industries. That would put the company's sales below average analysts' estimates of $4.21 billion.
But in a conference call with analysts, Eaton Chairman and CEO Sandy Cutler said he expects the company's electrical business to get involved in power restoration efforts on the East Coast in the aftermath of Hurricane Sandy. While events like these usually result in a little "pop" in business, it's hard to predict exactly how much, he said.
Eaton expects the Cooper acquisition to close by the end of the year.