Eaton Says Profit Drops In 3Q

CLEVELAND (AP) -- Eaton Corp., the industrial equipment maker, said Monday its third quarter profit fell 39 percent, but said it sees improvement in key markets that will help it beat its earlier projections for the full year.

Eaton's shares rose more than 4 percent in premarket trading.

Alexander M. Cutler, chairman and CEO, said sequential revenue trends show "the very early stages of recovery" in key Eaton markets as well as a benefit from stronger currencies against the dollar.

"As we look at our end markets, we expect the economic recovery we are beginning to experience in our early cycle markets will continue," Cutler said.

Cleveland-based Eaton said it earned $193 million, or $1.14 per share, for the three months ended Sept. 30, down from $315 million, or $1.87 per share, a year ago.

Excluding charges related to acquisitions, operating earnings per share amounted to $205 million, or $1.21 a share, down from $329 million, or $1.95 in the year-ago period.

Revenue fell 26 percent to $3.03 billion from $4.11 billion in the same quarter last year.

Analysts surveyed by Thomson Reuters expected, on average, earnings of 92 cents per share on revenue of $3.13 billion. Analysts typically exclude one-time items from their estimates.

Cutler said the company benefited from substantial cost-cutting in the past year. He also noted revenue grew 4 percent from the second quarter.

The company expects net income in the fourth quarter will be between $1 per share and $1.10 per share and operating earnings excluding charges to integrate recent acquisitions of $1.15 to $1.25 a share.

For the full year, Eaton increased its forecast, saying it now expects net income per share will be between $2.05 and $2.15 with operating earnings of $2.40 to $2.50 a share.

In July, Eaton said it expected net income for the year to be between $1.65 per share and $1.85.

Analysts expect earnings of $1.06 per share for the fourth quarter and $1.99 per share for the full year. Those estimates typically exclude one-time items.

Shares jumped $2.83, or 4.6 percent, to $63.25 in premarket trading Monday.

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