Eaton Corporation (NYSE:ETN), an S&P 500 power management company, released third quarter earnings today. The total income per share (inclusive of charges for integration of acquisitions) for the quarter amounted to 102 cents, or $345 million, which is 5 percent less than the EPS of 107 cents or $365 million reported in the third quarter of 2012. Excluding the charges on acquisitions, the EPS for this quarter was equal to 107 cents, which compares better with corresponding EPS of 108 cents reported in Q3 2011.
Revenue for the quarter was $3.95 billion, which is 4.2 percent less than the sales from Q3 2011. The fall in revenue comprises of a 2 percent decline in the core growth, 4 percent reduction in forex segment, and 2 percent decline in acquisitions’ growth. Eaton Corporation (NYSE:ETN)’s CEO, Alexander M. Cutler, said today,
“Our third quarter results came in very close to our expectations, despite the slowdown in economic growth, which we discussed in September at several investment conferences. Economic growth in the EU and China remained subdued during the quarter, while industrial activity in the U.S. decelerated during the quarter, reflecting uncertainties over fiscal reforms that have led customers to hold back on purchases. As a result, we expect our markets for the full year of 2012 will show less growth than we had anticipated earlier in the year, with our markets for the year now estimated to grow between 1 to 2 percent.”
With respect to business segments, Electrical Americas was a strong performer, where sales amounted to $1.14 billion, a 6 percent gain on the number reported in Q3 2o11. The operating margin for Electrical Americas was 18.2 percent, while for ex-America, the operating margin was registered at 11.2 percent. Operating profits were up by 31 percent at $208 million (exclusive of costs incurred from acquisition integration).
Analysts at Wall Street were expecting an EPS of 109 cents, while the revenue was expected to fall close to $4.24 billion. In the first two quarters of the running fiscal year, Eaton Corporation (NYSE:ETN) had beaten analysts’ expectations by a fair margin. The latest earnings mark the first dip in profits and revenue for the company, and breaks the streak of four healthy quarters that have ended with an increase in incomes and sales.
Cutler also indicated that fourth quarter earnings will be affected by the acquisition of Cooper Industries plc (NYSE:CBE), the deal is set to close near the end of this year. The costs from adjustments and financing of this transaction will lower the profits and increase the expenses in the fourth quarter. Guidance for the upcoming quarters, as given by analysts, is looking at an EPS of 110 cents, while the total earnings per share for FY2012 are estimated at $4.25. The outlook for both metrics have been reduced, after the results of the last quarter were announced.
Eaton Corporation (NYSE:ETN) is trading at $46.80, up 3.7 percent from the previous closing price.
