The 2020 Mid-Year Economic Update_long

Eaton Sales Up 2.9% in 2Q

Profit decreased 65.4 percent, impacted by divestitures and two litigation settlements.

Diversified industrial manufacturer Eaton Corp. (NYSE: ETN), Dublin, Ireland, reported sales for the second quarter of $5.8 billion, a 2.9 percent increase over the same period a year ago. Profit decreased 65.4 percent to $171 million from $497 million one year ago.

Eaton’s strongest margins were in sectors for electrical products, hydraulics, aerospace and vehicle, offset by weakness in electrical systems and services sectors.

“During the second quarter, several unusual items impacted our earnings,” CEO Alexander Cutler said. “First, we closed the divestiture of two small aerospace businesses for a pretax gain of $156 million. Second, we settled two longstanding litigations, one with Meritor and one with Triumph, as well as related litigation, for a pretax cost of $644 million.”

Sales for the electrical products segment were $1.8 billion, up 4 percent over 2013. Excluding acquisition integration charges of $12 million during the quarter, operating profits were $312 million, up 10 percent over the second quarter of 2013.

Sales for the electrical systems and services segment were $1.6 billion, the same as in the second quarter of 2013. Core sales were up 1 percent, which was offset by a decline of 1 percent from currency translation. The segment reported operating profits of $194 million. Excluding acquisition integration charges of $13 million during the quarter, operating profits were $207 million, down 13 percent from the second quarter of 2013.

Hydraulics segment sales were $787 million, an increase of 2 percent over the second quarter of 2013. Excluding acquisition integration charges of $5 million, operating profits were $99 million, a decrease of 12 percent. These results include $13 million in restructuring costs incurred during the quarter.

Aerospace segment sales were $486 million, up 9 percent over the second quarter of 2013. Operating profits in the second quarter were $69 million, up 3 percent over the second quarter of 2013. These results include $2 million in restructuring costs incurred during the quarter.

The vehicle segment posted sales of $1 billion, up 3 percent compared to the second quarter of 2013. The segment reported operating profits in the second quarter of $155 million, down 10 percent compared to the second quarter of 2013. These results include $24 million in restructuring costs incurred during the quarter.

For the first six months, sales were $11.3 billion, up 3.2 percent over the same period a year ago. Profit decreased 30 percent to $610 million from $872 million one year ago.

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