DUBLIN, Ireland—Power management company Eaton Corporation plc (NYSE:ETN) today announced that net income and operating earnings per share were $1.07 for the second quarter of 2016. Operating earnings exclude acquisition integration charges, which were negligible in the second quarter of 2016 and were $12 million in the second quarter of 2015. Operating earnings per share were down 8 percent from the second quarter of 2015. Sales in the second quarter of 2016 were down 5 percent from the same period in 2015.
Craig Arnold, Eaton chairman and chief executive officer, said, “Our second quarter results came in above the midpoint of our guidance, reflecting solid performance despite weak conditions across many of our markets.
“We generated $745 million of operating cash flow in the second quarter, a second quarter record,” said Arnold. “For the first half of 2016, operating cash flow totaled a record $1.116 billion.
“Our restructuring program is proceeding as planned,” said Arnold. “We spent $35 million in the second quarter, in line with our guidance. For full-year 2016, we are now planning to spend $145 million in restructuring costs, $5 million more than our previous guidance. We expect that restructuring savings for 2016 will also be $5 million more than our previous guidance. As a result, we continue to expect that our restructuring program will deliver $174 million of incremental profit in 2016 compared to 2015.
“We continue to expect a decline in organic revenue in 2016 of between 2 and 4 percent,” said Arnold. “We now estimate the impact of negative currency translation to be $225 million, $25 million higher than our previous estimate.
“We anticipate operating earnings per share for the third quarter of 2016 to be between $1.10 and $1.20,” said Arnold. “We are maintaining the midpoint of our guidance for full year operating earnings per share, but narrowing our guidance range to between $4.20 and $4.40.”
Business Segment Results
Sales for the Electrical Products segment were $1.8 billion, flat compared to the second quarter of 2015. Organic sales grew 1 percent while negative currency translation was 1 percent. Operating profits, excluding acquisition integration charges of $1 million, were $323 million, up 15 percent over the second quarter of 2015.
“Our operating margins in the second quarter were 18.1 percent, and excluding restructuring costs of $9 million, a very strong 18.6 percent,” said Arnold. “Our bookings in the second quarter in the Electrical Products segment were down 2 percent from the second quarter a year ago, driven by declines in the Americas and APAC. Orders in EMEA grew modestly.”
Sales for the Electrical Systems and Services segment were $1.4 billion, down 5 percent from the second quarter of 2015. Organic sales were down 3 percent and currency translation was negative 2 percent. Segment operating profits were $178 million, down 22 percent from the second quarter of 2015.
“As we expected, organic sales declined in the second quarter, reflecting the softness we saw in bookings over the last six months,” said Arnold. “Operating margins were 12.5 percent, and excluding restructuring costs of $3 million, 12.7 percent. Our margins were impacted by the continued weakness in large industrial projects and oil and gas markets.
“Bookings in the second quarter were down 2 percent from the second quarter of 2015, driven by declines in the Americas and APAC,” said Arnold. “Orders in EMEA showed strong growth during the quarter.”
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