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Eaton Reports 1 Percent Sales Increase for the Fourth Quarter

By Bridget McCrea

Power management company Eaton Corporation plc (NYSE:ETN) of Dublin, Ireland announced operating earnings per share for the fourth quarter of $1.27, which exclude charges of $0.04 per share to integrate recent acquisitions, an increase of 18 percent over the fourth quarter of 2013. The company’s sales in the quarter were $5.6 billion, up 1 percent over the same period in 2013. Operating earnings for the fourth quarter of 2014, which exclude charges of $32 million to integrate recent acquisitions, were $602 million compared to $516 million in the fourth quarter of 2013.

“We had a strong quarter, posting attractive organic growth, record fourth quarter segment margins of 15.9 percent, and operating earnings per share above the high end of our guidance range,” said Alexander M. Cutler, chairman and CEO, in a company press release. The company’ organic sales growth was 5 percent, the strongest quarter since the fourth quarter of 2011. Partially offsetting the strong organic growth was 3 percent from negative foreign exchange and 1 percent from the divestitures of two aerospace businesses during 2014.

“We generated record operating cash flow of $944 million in the fourth quarter,” said Cutler. “For the full year, we generated operating cash flow, excluding the legal settlements concluded in the middle of the year, of $2.53 billion, an all-time record. We repurchased $326 million of shares in the fourth quarter, bringing our full year share repurchases to $650 million or about 2 percent of our shares outstanding at the start of 2014.”

For the full year 2014, Eaton’s sales hit a record $22.6 billion, 2 percent higher than in 2013. Excluding charges to integrate recent acquisitions, legal settlements and a divestiture gain, the company’s operating earnings totaled a record $2.2 billion, up 13 percent over 2013. Operating earnings per share for 2014, excluding the same items, were a record $4.67, up 13 percent over 2013.

“Our full year 2014 sales increase of 2 percent reflects organic growth of 4 percent, partially offset by 1 percent from negative foreign exchange and 1 percent from the divestitures,” said Cutler, in the press release. “During 2014, our markets grew more slowly than we had expected. Despite that, operating earnings per share grew 13 percent, reflecting strong performance by our businesses as well as success in achieving the integration savings targeted from the Cooper acquisition.”

Fourth quarter sales for Eaton’s electrical products segment were $1.82 billion, up 2 percent over the fourth quarter of 2013, while sales for its electrical systems and services segment were $1.65 billion, a slight increase over the fourth quarter of 2013. The company’s hydraulics segment fourth quarter sales were $673 million, down 6 percent from the fourth quarter of 2013, while aerospace posted fourth quarter sales of $456 million, an increase of 2 percent over the fourth quarter of 2013. Eaton’s vehicle segment posted sales of $965 million in the fourth quarter, up 4 percent over the fourth quarter of 2013. 

For 2015, Cutler said he anticipates organic revenues will grow between 3 and 4 percent. “In light of the dramatic shifts in exchange rates during the second half of 2014 and carrying into 2015,” he said, “we expect the impact of negative foreign exchange to be approximately 4 percent.” 

McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.

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