HARTFORD, Conn. --
United Technologies Corp., saying the downturn in its core markets is worse than expected, cut its 2009 profit forecast 13 percent Tuesday and will eliminate 11,600 jobs, or 5 percent of its global work force.
The announcement by the maker of Otis elevators and Sikorsky helicopter reverses the guarded optimism of a month ago when the company's top executives continued to back a higher earnings forecast from December.
The company now says the markets for commercial aerospace and global construction have worsened since December as worldwide construction and aerospace orders slowed.
"We intend to be fully prepared for a deeper and longer deterioration of market conditions," Chief Executive Louis Chenevert told investor analysts at a conference in New York.
The company reduced its 2009 earnings per share forecast to between $4 and $4.50, from its outlook of $4.65 to $5.15 per share. That's a 13 percent cut measured from the midpoint of the range of each forecast.
The forecast includes 30 cents to 40 cents per share for $750 million in restructuring costs this year. Analysts, whose estimates typically exclude one-time items, expected a profit of $4.60 per share, according to Thomson Reuters.
Since issuing the initial guidance, United Technologies' restructuring costs have soared to $750 million for 2009 from $150 million. Meanwhile, pension costs have risen and aerospace and its other key markets have deteriorated, Chenevert said.
United Technologies said it expects to cut 11,600 jobs - 5 percent of its 223,100 workers worldwide - because of a deteriorating commercial aerospace market. The work force reductions bring to 18,000 the number of jobs cut this year and in 2008.
The cuts will be in administrative and sales jobs and from overhead costs, not in manufacturing.
The moves are being driven by a decline in expected revenue, which is now seen totaling $55 billion, down $2.7 billion from its prior estimate, but still largely in line with Wall Street's $55.21 billion target.
Analyst Cai von Rumohr of Cowen and Co. said in an interview the reduced guidance brings the company more into line with current market conditions.
"Before you were on the bottom of the range wondering if you can hang in there. Now, it looks like a real estimate," he said.
Shipments by business jet engine maker Pratt & Whitney Canada, which last year were forecast to be up 20 percent in 2009, are now likely to be flat over 2008, Chenevert said. And East Hartford, Conn.-based Pratt & Whitney has been hurt by declining large commercial aircraft, he said.
Meanwhile, the slowdown in global construction is pinching sales at its Otis elevator and Carrier heating, ventilating and air conditioning equipment units.
Analyst Matt Collins of Edward Jones said in an interview United Technologies avoided the worst of the recession in 2008 but had no choice but to now cut its forecast.
"Normally they benefit from the diversity of the business, both geographically and by business segment," he said. "In the last couple of months there's no place to hide."
United Technologies shares climbed $3.23, or 8.6 percent, to $40.79 Tuesday as the broader market surged.
