Eaton Posts Q1 Profit on Global Economic Growth

April 20, 2010
Saw improvement in automotive segment with sales up 39% from the same period last year

The expanding global economy pushed diversified manufacturer Eaton Corp. back to a profit in the first quarter, the company reported on April 20. CEO Alexander M. Cutler said Eaton's "newly reset cost structure" also helped the company to "realize attractive incremental margins."

The Cleveland company makes hydraulics and electrical equipment used by manufacturers in a variety of industries.

In a conference call with analysts, Cutler highlighted the "enormous change" in the improving automotive segment, where first-quarter sales of $374 million were up 39% from the same period last year.

The segment had an operating profit of $42 million, compared with a loss of $45 million in the first three months of 2009.

"It's quite a year of recovery," Cutler said.

Eaton earned $155 million, or 91 cents per share, in the three months ended March 31, versus a loss of $50 million, or 30 cents per share, a year earlier amid the deepening recession.

Sales rose 10% to $3.1 billion from $2.8 billion a year earlier. Half the increase came from higher foreign exchange rates.

Both the revenue and adjusted earning per share figures topped Wall Street estimates.

The company said its operating income was $1.09 a share if charges were excluded for the integration of acquisitions and the tax impact of the recently-enacted health care reforms.

Eaton said its end markets grew 4% in the most recent quarter and it expects overall growth in end markets of 6% for the year.

"In general, we are seeing the strongest growth in Asia and Brazil, while many U.S. markets are starting to accelerate and Europe is recovering more modestly," Cutler said.

For the year, Eaton expects global automotive markets to grow 15%, with U.S. production up 31% and production up 6% elsewhere.

Copyright 2010 The Associated Press.

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