DUBLIN (AP) — Eaton Corp. PLC (ETN) on Wednesday reported second-quarter profit of $535 million.
On a per-share basis, the Dublin-based company said it had profit of $1.14. Earnings, adjusted for costs related to mergers and acquisitions, were $1.16 per share.
The results exceeded Wall Street expectations. The average estimate of 13 analysts surveyed by Zacks Investment Research was for earnings of $1.14 per share.
The power management company posted revenue of $5.37 billion in the period, missing Street forecasts. Ten analysts surveyed by Zacks expected $5.51 billion.
Eaton expects full-year earnings in the range of $4.40 to $4.60 per share.
Eaton shares have decreased 9.5 percent since the beginning of the year, while the Standard & Poor’s 500 index has increased roughly 2 percent. The stock has dropped 20 percent in the last 12 months.
Alexander M. Cutler, Eaton chairman and chief executive officer, said, “Our second quarter operating earnings per share came in above the midpoint of our guidance for the quarter. Operating earnings per share were up 5 percent over the second quarter of 2014, driven by strong operating margin performance and tightly controlled costs, partially offset by a 5 percent negative impact from currency translation. Without the negative currency impact, our second quarter operating earnings per share would have grown 10 percent.
“Revenue was slightly below expectations due to weaker conditions in most of our markets,” said Cutler. “The 7 percent sales decline in the second quarter consisted of a decline of 6 percent from currency translation and a decline of 1 percent in organic sales.
“Following weaker than expected market conditions in the first quarter, we had expected our end markets to strengthen during the balance of this year,” said Cutler. “While demand in the second quarter did strengthen, we do not expect further strengthening over the balance of the year. Accordingly, we now believe our organic revenue growth will be just modestly positive in 2015, likely coming in between 0 and 1 percent, down 2 percent from our prior expectation.
“As a result, we are taking additional actions to reset our cost structure to the lower activity levels we are seeing,” said Cutler. “We anticipate taking charges to implement these actions of $120 million in the second half of 2015, with $110 million in the third quarter and $10 million in the fourth quarter, and $25 million in 2016. The restructuring actions will allow us to realize $45 million of benefits in 2015 and $125 million of benefits in 2016.
“We anticipate operating earnings per share for the third quarter of 2015, which exclude an estimated $14 million of charges to integrate our recent acquisitions, but include the cost and benefits of the restructuring program, to be between $1.00 and $1.10,” said Cutler. “Due to our lower organic growth forecast and the impact of the restructuring actions, we are lowering our full year 2015 guidance for operating earnings per share to between $4.40 and $4.60, a decline of 6 percent from the midpoint of our prior guidance. Of the 6 percent reduction, 3 percent is due to the net cost of the restructuring program,” said Cutler.
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