Eaton Corp. (ETN) swung to a bigger-than-expected profit in the
first quarter as sales and margins surged amid an improving global
economy.
The diversified industrial company also forecast second-quarter
earnings of $1.05 to $1.15 a share, higher than the 95-cent average
estimate of analysts polled by Thomson Reuters. It raised its
full-year profit forecast by 45 cents a share to $4.15 to
$4.45.
Shares rose 1.5% to $80.35 in premarket trading. The stock has
doubled the past year.
"The expanding world economy drove growth in most of our markets
and our newly reset cost structure allowed us to realize attractive
incremental margins," Chairman and Chief Executive Alexander Cutler
said.
Eaton is benefiting from improved operating performance amid a
modest global economic recovery. Last year it cut 10% of its
workforce and reduced auto industry exposure. Chief Executive
Alexander Cutler said in January he expects 2010 to be a
"transitional year of growth."
Profit for the period was $156 million, or 91 cents a share,
compared with a year-earlier loss of $52 million, or 30 cents a
share. The latest quarter included 18 cents in charges, primarily
related to the recently enacted federal health-care
legislation.
Revenue jumped 10% to $3.1 billion, with organic growth and
higher foreign-exchange rates each accounting for half the
increase.
Analysts predicted earnings of 83 cents on $3.06 billion in
revenue.
Gross margin climbed to 27% from 22.7%.
Sales in the company's electrical Americas segment, which
accounts for most of its business, fell 7% as foreign electrical,
hydraulics, truck and automotive unit sales all increased.
-By Matt Jarzemsky; Dow Jones Newswires; 212-416-2240, matthew.jarzemsky@dowjones.com