Diversified industrial manufacturer Eaton Corporation (NYSE:ETN), Cleveland, OH, announced sales in the first quarter 2012 were $4 billion, 4 percent ahead of the same period in 2011. Profit was $311 million, up 8 percent.
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The 4 percent growth included 4 percent organic growth and 1 percent acquisitions, partially offset by a 1 percent decline from lower foreign exchange rates.
"We entered 2012 expecting it would be a year of subpar global economic growth, leading to approximately 5 percent growth in our markets," said CEO Alexander Cutler. "We continue to believe that for the full year markets will grow 5 percent, but we now believe the rate of growth in our U.S. markets will be higher than originally expected and the rate of growth in our non-U.S. markets will be lower than originally expected."
Business Segment Results
Sales for the Electrical Americas segment were $1.1 billion, up 13 percent over 2011. Operating profits were $162 million. End markets for our Electrical Americas segment grew 7 percent in the first quarter. The manufacturer saw strong growth particularly in the nonresidential construction markets. Bookings were up 6 percent.
Sales for the Electrical Rest of World segment were $651 million, down 12 percent from the first quarter of 2011. Electrical Rest of World markets were down 7 percent in the quarter. The segment reported operating profits of $53 million.
"The European and Asia-Pacific electrical markets declined during the first quarter," Cutler said. "We do not expect these markets to recover until later in the second half. For the year as a whole, we believe our Electrical Rest of World markets will decline by 1 percent, down 2 percent from our prior estimate."
Hydraulics segment sales were $735 million, an increase of 7 percent compared to the first quarter of 2011. Global hydraulics markets increased 4 percent in the quarter compared to the first quarter of 2011. Operating profits in the first quarter were $109 million.
"The hydraulics markets in the first quarter grew about as expected," said Cutler. "Our bookings in the quarter declined 15 percent from the first quarter of 2011, as bookings in the first quarter last year reflected orders placed by OEM customers to rebuild their order backlog with suppliers.”
Aerospace segment sales were $430 million, up 11 percent over the first quarter of 2011. Aerospace markets grew 6 percent compared to the first quarter of 2011. Operating profits in the first quarter were $60 million.
"As we expected, the rapid growth of commercial OEM sales, greatly in excess of the aftermarket, caused our operating margin in Aerospace to be lower than it typically is," said Cutler.
The Truck segment posted sales of $631 million, up 10 percent compared to the first quarter of 2011. Truck markets increased by 11 percent in the first quarter. The segment reported operating profits in the first quarter of $116 million.
U.S. truck markets continued their rapid growth in the first quarter, with NAFTA Class 8 production growing 50 percent compared to the first quarter in 2011 and 3 percent over the fourth quarter of 2011, according to Eaton. Non-U.S. markets declined 7 percent, driven by lower production in Brazil following the prebuy at the end of 2011.
The Automotive segment posted first quarter sales of $426 million, down 4 percent from the first quarter of 2011. The 4 percent decline was made up of 3 percent core growth offset by a 3 percent decline due to foreign exchange and a 4 percent decline due to a divestiture in the fourth quarter of 2011. Global automotive markets were up 4 percent. The segment reported operating profits of $44 million.
