United Technologies reported second- quarter earnings above expectations on Tuesday morning, but slashed its forecast for the rest of the year.
The reasons include “a slowing China.”
The multinational giant whose products include elevators and aircraft engines cut its outlook for full-year earnings, and now expects EPS of between $US6.45 and $US6.60. Sales from continuing operations are expected at between $US57 and $US58 billion, down from a previous range of $US58 to $US59 billion.
In the earnings statement, CEO Gregory Hayes said: “With six months of trends behind us, it is now clear the commercial aftermarket at UTC Aerospace Systems will be significantly below our expectations for the year. This, along with continuing softness in Otis Europe and a slowing China, led us to reassess our 2015 outlook for UTC Aerospace Systems and Otis.“
Last month, China cut its growth forecasts for the full year, downgrading 2015 gross domestic product growth to 7.0% from 7.1%. However, its most recent GDP print came in right in line at 7%.
The recent stock market crash, after a rally of more than 100%, is also weighing on optimism about China.
United Technologies’ second quarter earnings per share came in at $US1.73, higher than the consensus expectation for $US1.71 according to Bloomberg. The company posted sales of $US16.3 billion, down 5%, and lower than the forecast for $US16.5 billion.
Hayes further said: “Through the first half of the year, the businesses delivered 3 per cent organic sales growth in what continues to be a slow growth global economy. This solid growth contributed to a 6 per cent increase in EPS on a constant currency basis, excluding the impact of gains and restructuring.”
In premarket trading on Tuesday, United Technologies fell 2%.