Eaton Corp. (NYSE: ETN) reported on Monday that fiscal second quarter profit soared 14%; however, its revenues for the period fell due to flagging demand in international markets. The company also downwardly revised its full-year profit and revenues guidance.
The company’s earnings topped analysts’ estimation as improved margins and lower tax rate helped it to make up for a dip in revenues.
The company blamed poor demand from emerging economies such as China, Brazil and India in addition to economic uncertainty in Europe owing to ongoing sovereign debt crisis for its slower pace of growth.
The company also attributed currency exchange volatility for a decline in sales.
Eaton’s profit from its electrical division excluding U.S. market plunged 29% from a year ago to $55 million, even as sales slumped 13% to $683 million. Continued economic deterioration in Europe and sharp slowdown in China were the biggest factors that contributed to plunge in international sales, according to Eaton.
In the hydraulics division, profit climbed up 5% to $126 million while sales also rose 6% to $769 million. Sales to the U.S. farm and construction-equipment sector leaped 7% in the quarter, offsetting lower sales in global markets.
For its truck business, second-quarter operating profit was remained almost unchanged from a year ago at $120 million. However, the unit’s operating margin rose to 19.2% from 17.8%, over the corresponding period, compensating a 7% decline in truck unit sales.
Meanwhile, its hydraulics sales rose 20% in the U.S., nevertheless, sales to Brazil’s truck and bus market plummeted 33% in the fiscal second quarter.
In the quarter that ended June 30, Eaton consolidated profit stood at $382 million, or $1.12 a share, against year-earlier profit of $336 million, or 97 cents a share.
After excluding acquisition- and integration-related costs, earnings climbed up $1.15 a share from 97 cents a year earlier.
Analysts polled by Thomson Reuters forecasted earnings of $1.09 a share on revenues of $4.24 billion. However, actual revenues were 0.5% lower from projections.
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