United Tech unlikely to grow earnings by 10 pct in 2016, CEO says
(Adds CEO comments from conference)
By Lewis Krauskopf
Sept 17 (Reuters) - United Technologies Corp is unlikely to hit its traditional target of growing earnings by at least 10 percent in 2016, as it confronts challenges to its jet engine and China businesses, the U.S. conglomerate's chief executive officer said on Thursday.
"That's always the goal for UTC - double-digit earnings growth forever," CEO Greg Hayes told a Morgan Stanley investor conference. "As I stand here today, I don't see it for next year."
The comments seem to fall in line with Wall Street's general thinking: Analysts on average have been expecting UTC to increase earnings per share by 9.3 percent next year, according to Thomson Reuters I/B/E/S.
United Tech shares were up 0.2 percent at $94.09 in afternoon trading. They have fallen some 18 percent this year, as the company has cut its 2015 profit forecast three times.
The company has dimmed its expectations for its Otis elevators division, including for new equipment sales in China, a big market for the unit. Concerns over the health of the world's second-biggest economy has rattled investors in a wide range of industrial companies exposed to it.
Hayes said United Technologies' China business, which represents 6 percent of UTC's overall revenue, could fall 10 percent next year.
UTC's Pratt & Whitney division is increasing production of a new commercial jet engine that is set to propel revenue for many years.
But in the near term, the launch of the engine will pressure UTC's profit, Hayes said. Jet engines tend to suffer from high initial sales costs and inevitable lag in the most lucrative piece of the business: repairs and overhaul.
Hayes has said for months he was interested in striking a major acquisition, but on Thursday he said he did not foresee any big deals "right now."
Instead, he said the company is poised to use cash to buy back more shares. UTC has already repurchased $4 billion in shares this year, including $1 billion in recent weeks after the stock swooned following the most recent quarterly earnings report.
"There is no better big deal than to buy my own stock," Hayes said.
(Reporting by Lewis Krauskopf in New York; Editing by Jeffrey Benkoe and Christian Plumb)
