United Tech profit jumps on aerospace, tax boosts

(Reuters) - United Technologies Corp (UTX.N) beat analysts’ estimates for fourth-quarter profit on Wednesday, boosted by a lower tax rate and double-digit sales growth at its aerospace businesses, sending the industrial conglomerate’s shares up 5 percent.

The company, which makes Pratt & Whitney aircraft engines, Carrier air conditioners and Otis elevators, also forecast 2019 earnings largely above estimates, driven by its acquisition of aero parts maker Rockwell Collins.

Like other major U.S. manufacturers, United Technologies has benefited from robust demand for aircraft parts driven by a boom in air travel and record global orders for commercial jets.

After completing its purchase of Rockwell Collins in November, it said it planned to create one purely aerospace-focused business with engine producer Pratt & Whitney while spinning off the Otis and Carrier units.

Investors have been skeptical about how that split may pan out, knocking 14 percent off the company’s shares since it was announced.

Wolfe Research analyst Nigel Coe said the strong full-year forecast was likely to boost confidence in UTC’s ability to raise profit ahead of the breakup.

“Expectations were low, the stock has underperformed and we believe that street estimates for 2019 (earnings per share) should rise by 5 to 10 cents,” Coe wrote in a note.

The company forecast 2019 adjusted earnings per share between $7.70 and $8.00, the mid-point of which is well above the average estimate of $7.80, according to IBES data from Refinitiv.

Sales at Pratt & Whitney jumped about 24 percent to $5.54 billion in the fourth quarter ended Dec. 31, while Collins Aerospace reported a rise in sales by about 29 percent to $4.90 billion.

The company’s income attributable to shareholders rose 72.8 percent to $686 million, or 83 cents per share in the reported quarter.

On an adjusted basis, United Technologies earned $1.95 per share, above estimates of $1.53 per share.

Net sales rose 15.1 percent to $18.04 billion, beating estimates of $16.91 billion.

Reporting by Ankit Ajmera in Bengaluru; Editing by Shounak Dasgupta