HARTFORD, Conn.—United Technologies Corp., which reports its third-quarter earnings results before the markets open Wednesday, could give investors some insight into the impact of recent developments in the airline and real estate markets.
The report comes just weeks after it announced it will buy Goodrich Corp. for $16.4 billion in cash and a week after subsidiary Pratt & Whitney said it will buy out Rolls-Royce from a joint Airbus venture.
The Hartford, Conn., conglomerate, which makes jet engines, elevators, airline electrical parts and other aerospace and building systems components, also announced a corporate restructuring last month that establishes two divisions for climate and security systems and propulsion and aerospace.
WHAT TO WATCH FOR: The results may show whether United Technologies is being hurt by reduced capacity at airlines. It has a big stake in the airline industry with jet engine maker Pratt & Whitney and aerospace parts manufacturer Hamilton Sundstrand.
American Airlines has announced it will reduce passenger-carrying capacity through the end of the year by about 3 percent compared with 2010. It cited the weak economy, high fuel costs and an increase in the number of retiring pilots. United Continental and Delta have announced similar plans. Reducing capacity improves efficiency and often allows airlines to raise fares with fewer seats.
Earnings results also will provide a glimpse into how commercial and residential real estate is performing in the weak recovery. United Technologies' Carrier division manufactures building heating and cooling equipment and its business has improved with a strengthening refrigerated trucking business.
United Technologies' Otis elevator segment, which mirrors the health of markets in China and U.S. commercial real estate, posted a double-digit increase in orders in the second quarter.
WHY IT MATTERS: Results could show the direction of consumer spending on airline travel, the home building industry and defense spending, which is expected to decline as Congress and the Obama administration cut spending. Helicopters manufactured by United Technologies' Sikorsky Aircraft Corp. have played a significant role in the U.S. wars in Afghanistan and Iraq.
WHAT'S EXPECTED: Analysts expect United Technologies to post earnings per share of $1.44 on revenue of $14.55 billion.
LAST YEAR'S QUARTER: United Technologies earned $1.2 billion, or $1.30 per share, up from $1.06 billion, or $1.14 per share, in the year-earlier period. Revenue rose to $13.53 billion, from $13.38 billion.