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Diversified industrial manufacturer Eaton Corp., Cleveland, OH, (NYSE:ETN) reported sales for the first quarter 2011 were up 23 percent from the first quarter 2010 to $3.8 billion. Profit was $287 million, up 85 percent from the prior-year period.
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Alexander M. Cutler, Eaton CEO, said: “We had a strong first quarter, with earnings per share above the high end of our increased earnings guidance provided at the end of February. Our markets enjoyed strong growth during the first quarter, increasing 14 percent compared to the first quarter of 2010. The sales growth in the first quarter of 23 percent consisted of 19 percent organic growth, 2 percent from acquisitions, and 2 percent from higher foreign exchange rates.
“Our Electrical Americas, Hydraulics, and Truck markets grew more strongly than anticipated and we are increasing our expectations for the growth of these three markets in 2011,” he said. “As a result, we now anticipate our markets for all of 2011 will grow by 10 percent."
Business Segment Results
Sales for the Electrical Americas segment were $964 million, up 20 percent over 2010. The sales increase was made up of a 15 percent increase in core sales, 4 percent from acquisitions, and 1 percent from foreign exchange. Operating profits were $132 million.
“End markets for our Electrical Americas segment grew 14 percent in the first quarter,” said Cutler. “We saw solid growth in our industrial markets, and we continue to believe nonresidential construction activity is on track to begin recovering by the middle of this year.
“Our bookings in the Electrical Americas segment were up 21 percent from the first quarter a year ago. We are revising our estimate of the growth in 2011 of the Electrical Americas markets to 7 percent, 1 percent higher than our prior estimate.”
Sales for the Electrical Rest of World segment were $743 million, up 22 percent over the first quarter of 2010. Electrical Rest of World markets grew 9 percent in the quarter.
“During the quarter, we reached agreement to acquire ACTOM (Pty) Limited’s low-voltage electrical business in South Africa,” Cutler said. “This acquisition provides us with a solid position in the South African electrical market, as well as a platform for growth in southern Africa.”
Hydraulics segment sales were $685 million, an increase of 40 percent compared with the first quarter of 2010. Global hydraulics markets increased 27 percent in the quarter compared to the first quarter of 2010. Operating profits in the first quarter were $106 million, an increase of 96 percent over the first quarter of 2010.
“The hydraulics markets in the first quarter continued their ‘V’ shape recovery from the sharp downturn of 2008-2009,” said Cutler. “Bookings in the quarter grew 39 percent over the first quarter of 2010, establishing a new quarterly bookings record. For all of 2011, we now believe hydraulics markets are likely to grow by 18 percent, up from our prior estimate of 16 percent."
Aerospace segment sales were $389 million, up 3 percent over the first quarter of 2010. Aerospace markets grew 2 percent compared to the first quarter of 2010. Operating profits in the first quarter were $45 million, a decline of 8 percent compared to a year earlier.
“Our margins in Aerospace were impacted during the quarter by increased expenses stemming from changes in scope, program delays, and execution of new customer programs,” said Cutler. “We anticipate that margins will likely improve by the second half of the year."
The Truck segment posted sales of $576 million, up 27 percent compared to the first quarter of 2010. Truck markets increased by 20 percent in the first quarter. The segment reported operating profits in the first quarter of $90 million, an increase of 96 percent over the first quarter of 2010.
“U.S. truck markets accelerated in the first quarter, growing 36 percent compared to the first quarter in 2010 and 16 percent over the fourth quarter of 2010,” said Cutler. “Our non-U.S. markets grew 9 percent."
The Automotive segment posted first quarter sales of $446 million, up 19 percent from the first quarter of 2010. Global automotive markets were up 13 percent. The segment reported operating profits of $50 million, up 19 percent compared to the first quarter of 2010.
“Global auto markets posted strong growth in the first quarter,” said Cutler. “U.S. markets grew 17 percent while markets outside the U.S. grew 12 percent.”
Eaton had 2010 sales of $13.7 billion.