Diversified industrial manufacturer Eaton Corp. (NYSE:ETN), Cleveland, OH, reported sales in the second quarter 2010 were $3.38 billion, 16 percent over the second quarter 2009. Profit was $226 million, up from $29 million in 2009.
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“As we survey our end markets, the year is shaping up to be better than we had forecast in April,” said CEO Alexander M. Cutler. “We now anticipate our overall end markets will grow by 8 percent versus our earlier forecast of 6 percent."
Second quarter sales for the Electrical Americas segment were $894 million, up 1 percent from 2009. Operating profits for the segment were $120 million. “End markets for our Electrical Americas segment declined 2 percent during the second quarter,” Cutler said. “Our late-cycle non-residential markets declined about 17 percent in the quarter, while we saw continued growth in our early-cycle businesses and the start of recovery in our mid-cycle businesses." Bookings for this segment, adjusted for foreign exchange, were up 27 percent from 2009.
“We now anticipate markets in our Electrical Americas segment will decline just 1 percent for the full year, as the recovery in our early- and mid-cycle markets and the benefits from stimulus programs have offset the decline in the non-residential market," Cutler said.
Sales for the Electrical Rest of World segment were $665 million, an increase of 12 percent compared with the second quarter of 2009. The sales increase was comprised of a 15 percent increase in core sales and 1 percent growth from acquisitions, offset by a 4 percent decline due to foreign currency. The segment reported operating profits of $60 million.
Hydraulics segment sales were $568 million, up 34 percent compared to the second quarter of 2009. Global hydraulics markets were up 34 percent in the quarter, with U.S. markets up 40 percent and non-U.S. markets up 30 percent. Operating profits in the second quarter were $77 million compared to $14 million in the second quarter of 2009.
“The global hydraulics markets in the second quarter continued the strong rebound we saw in the first quarter,” Cutler said. “Our bookings, adjusted for foreign exchange, increased 69 percent in the second quarter. We believe hydraulics markets will show further growth over the balance of the year. As a result, we now believe global hydraulics markets for all of 2010 will increase by 26 percent, considerably stronger than our previous growth expectations."
During the quarter Eaton signed a global strategic alliance agreement with Linde Hydraulics of Germany.
Aerospace segment sales were $370 million, 9 percent below the second quarter of 2009. Aerospace markets were down 1 percent compared to the second quarter of 2009. Operating profits in the second quarter were $48 million.
“Aerospace bookings grew 28 percent during the second quarter, adjusted for foreign exchange, reflecting improved conditions at OEs and in the aftermarket,” Cutler said. “We are maintaining our forecast that the global aerospace market will be down 1 percent in 2010."
In mid-July, Eaton signed a joint venture agreement with a subsidiary of Commercial Aircraft Corp. of China to design, develop, manufacture, and support fuel and conveyance systems for the commercial aerospace market, starting with the COMAC C919 single-aisle program.
The Truck segment posted sales of $492 million in the second quarter, up 53 percent compared to 2009. Truck production in the second quarter was up 28 percent, with U.S. markets up 32 percent and non-U.S. markets up 24 percent. The segment reported operating profits of $59 million.
“We expect truck production in the second half to increase compared to the first half,” Cutler said. “Demand in NAFTA for Class 8 trucks is beginning to improve, as freight growth and the aging truck fleet are finally starting to generate an increase in truck orders. For all of 2010, we now anticipate our Truck markets will increase by 23 percent, stronger than our earlier expectations."
The Automotive segment posted second quarter sales of $389 million, up 44 percent from the second quarter of 2009. Global automotive markets were up 34 percent with U.S. markets up 73 percent and non-U.S. markets up 15 percent. The segment reported operating profits of $39 million.
“Automotive production in the U.S. continued at about the same level as in the first quarter, as inventory rebuilding continued,” Cutler said. “We anticipate U.S. production will be slightly lower in the second half, since inventory levels are now close to normal. For all of 2010, we now anticipate global automotive markets will grow by 17 percent, slightly higher than our previous forecast.”
Eaton had 2009 sales of $11.9 billion.