Eaton reports 2% sales growth for 2012

Eaton Corporation plc (NYSE:ETN) reported sales of $4.3 billion for the fourth quarter of 2012 and $16.3 billion for 2012, representing increases of 7% and 2%, respectively, compared to the same periods during the prior year. The company’s net income was $1.22 billion for 2012 and net income per share was $3.46. Operating earnings in 2012 totaled $1.38 billion, an increase of 2% compared to 2011. Operating earnings per share for 2012 were $3.94 versus $3.96 in 2011.

For the fourth quarter, Eaton’s net income was $179 million compared to $362 million in 2011, a decrease of 51%. Operating earnings, which exclude acquisition integration charges and acquisition transaction costs, were $316 million compared to $366 million in 2011, a decrease of 14%.

A diversified power management company that provides energy-efficient electrical, hydraulic, and mechanical power solutions, Eaton acquired Cooper Industries plc in 2012. Eaton’s net income per share of $0.46 for the fourth quarter of 2012 reflects the impact of closing the acquisition of Cooper on November 30, 2012. Net income included charges related to integrating recent acquisitions and transaction costs related to acquisitions.

“We closed the acquisition of Cooper at the end of November and are off to a great start on the integration of Cooper into Eaton,” said Alexander M. Cutler, Eaton chairman and CEO, in a press release. “As we had previously communicated, the closing of the Cooper transaction resulted in several unusual financial impacts to our fourth quarter results.”

Fourth quarter sales for the Cooper segment were $470 million, reflecting Eaton’s ownership of the company for the month of December. Operating profits were $66 million. Excluding acquisition integration charges of $2 million during the quarter, operating profits were $68 million.

“In 2013, we are going to be resegmenting our electrical business,” said Cutler. “We will be reporting two segments, the first named Electrical Products and the second named Electrical Systems and Services. For 2013, we expect our overall electrical markets to grow 3 to 4 percent.”

Eaton’s operating earnings per share in the fourth quarter of 2012 were $0.82 compared to $1.08 per share in the fourth quarter of 2011. Operating earnings per share in 2012 included restructuring actions of $(0.14) per share taken in the fourth quarter related to weaker than originally anticipated end market demand in the fourth quarter of 2012, weakness which is expected to continue into early 2013.

“Our full-year 2012 sales increase of just 2 percent reflects the impact of continued uncertainty about economic growth in all major regions of the world,” said Cutler. “Looking back at 2012, while weak economic conditions impacted our sales growth, with the acquisition of Cooper, 2012 will go down in Eaton’s history as a year of immense transformation.”

Eaton’s fourth quarter sales for the electrical Americas segment were $1.2 billion, up 3% from the fourth quarter of 2011. Operating profits in the fourth quarter were $190 million. In the hydraulics segment, fourth quarter sales were $693 million, 2% lower than the fourth quarter of 2011.  Sales for the electrical Rest of World segment were $711 million for the fourth quarter, up 2% over the fourth quarter of 2011.

Cutler is bullish on Eaton’s prospects for the coming year. “In 2013, we anticipate our revenues will grow approximately 42 percent,” said Cutler. “Acquisitions completed in 2012 are expected to add $6 billion of revenues…and we expect that 2013 operating earnings per share will set a record.”

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