High technology aerospace products manufacturer optimistic for 2015, as construction and commercial aerospace sector continues to thrive.
United Technologies Corporation is bullish for the fiscal year 2015, citing the growing strength of construction and commercial aviation sectors but, just like the rest of other corporations (who have exposure to foreign markets) expected to report their results for this quarter, complains about the stronger dollar eating away revenues and, in turn, their bottom lines. In UTC’s case, it shaved off 4% of their sales, and lead to a 1% decline in profits.
Despite the decline though, net sales rose by 18% to over $1.4 billion, leading many analysts to be bullish about the UTC’s 2015 prospects. Division wise, the company’s Otis Elevator division and the Climate, Controls, & Security division reported a decline and flat revenue growth respectively. It is reported from the financials that new orders for Otis division rose by over 8%, and 6% for the Climate division. It must be noted that the construction sector is sensitive on the economic conditions, but with the US and global economy on a path of strong and steady growth, there are reasons for optimism.
On the aircraft decision, revenue from the commercial aerospace growth grew by 3%, whereas the military aircraft decision fell flat, because of tightening government budgets for the defense sector, as many developed countries still grapple with high budget and current account deficits. Even with the flat military spending, it is still predicted that the commercial aircraft division will be enough to offset the flat sales from the military side.
It was reported earlier this year that the company will look for strategic alternatives for its Sikorsky Helicopters, and there are strong indications that it may opt to go for a standalone company because firstly, sales at Sikorsky shrank by more than 7%, and secondly, investors and management could not find any synergies if the subsidiary was attached with either Pratt & Whitney or UTC Aerospace Systems.
UTC’s guidance for 2015 estimates sales of around $65-66 billion, and earnings per share price of around less than $7, while taking currency fluctuations and weak military spending into account. That is what investors should expect at best!
UTC stock price ended the day at $117.04, a decline of 0.20% from the previous day. Despite the short-term guidance, it seems that investors are also weighing on the long-term perspective too, which is not a bad idea, but it is highly recommended that they hold on to its stock, unless some major revisions in forecast are foreseen, which look unlikely in some cases.