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10 Dec 15. United Technologies unveils $1.5bn restructuring plan to cut costs. United Technologies Corp (UTX.N) forecast a slight profit rise next year and announced a $1.5bin restructuring plan to reduce costs, sending its shares up in extended trading. The U.S. aerospace and building systems conglomerate said 2016 adjusted earnings will be $6.30 to $6.60 per share on revenue of $56bn to $58bn. Most of the EPS gain will come from share buybacks, it noted. The company also expects 2015 adjusted earnings of $6.20-$6.30 per share, raising the lower end of the previous estimate by 5 cents. The restructuring will cost about $500m a year over three years, Chief Executive Officer Gregory Hayes said at an investor and analyst meeting. When completed, the program is expected to generate about $900m in annual savings, mainly through factory consolidation, Hayes said. United Technologies shares were up 1.4 percent at $95.20 in extended trading. While the restructuring and about $2bn in research and development spending next year could cause GAAP earnings to fall in 2016, it positions the maker of maker Otis elevators, Carrier heating and cooling systems and Pratt & Whitney aircraft engines for longer-term growth, Hayes said.
The company expects slowing in China and weak growth in Latin America and Europe. It also forecasts the dollar at parity with the euro, versus an average of $1.12 per euro this year.
Analysts described the forecast as conservative. But it follows a year in which United Technologies cut its 2015 profit outlook three times and saw its results dented by the strong dollar and pressures in its various businesses.
The Pratt & Whitney division is expected to see a slight rise in sales next year, and it faces rising costs as it ramps up production to about 200 units.
Hayes said United Technologies is focused on “reinvigorating top-line growth” and would tolerate lower profit margins in some areas to increase sales. “We have lost (market) share over the last 10 years,” as margins rose to 20 percent from 12 percent, Hayes said.
Analysts expect 2016 earnings of $6.57 per share on a revenue of $58.58bn according to Thomson Reuters I/B/E/S. They estimate 2015 earnings of $6.27 per share.
United Technologies closed the $9bn sale of Sikorsky Aircraft to Lockheed Martin Corp (LMT.N) last month. The company said on Thursday it expects to record a $3.3bn after-tax gain on the sale in the current quarter. (Source: Reuters)
07 Dec 15. Serco Slumps Most Since March as Earnings to Tumble in 2016. Serco Group Plc slumped the most in eight months after the U.K. outsourcing specialist said earnings may plunge almost 50 percent next year following a slowdown in the awarding of new contracts in Britain.
Serco stock fell 13 percent Monday, the steepest drop since March 12, after the Hook, England-based company said underlying trading profit will total about 50m pounds ($75m) in 2016, down from the 95m pounds it estimates for 2015. Chief Executive Officer Rupert Soames said bids have been held up by the U.K. general election in May and a review of state spending concluded last month. While the review produced a slew of potential new contracts, such as nine prisons and outsourcing of defense services, the tenders won’t produce “meaningful revenue” until 2017, he said.
“We’ve got to start rebuilding our pipeline,” Soames said on a conference call with analysts. “It’s been weak now for two years, but we are seeing signs of strong encouragement. We’ve been trying to get more disciplined in our bidding and the margins that we take.”
Serco shares traded 6.7 percent lower at 106.70 pence as of 11:03 a.m. in London, valuing the business at 1.17bn pounds.
Increased contract discipline