NEW YORK, March 14 (Reuters) - Air conditioner maker Ingersoll Rand plc said on Wednesday housing and commercial construction remains soft in the developed markets that account for most of its sales, but is strong in emerging economies where it was committing more resources.
“Commercial and residential building has bottomed out but hasn’t (shown) any meaningful recovery in demand,” Chief Executive Mike Lamach said at an investor conference.
Ingersoll, which gets nearly two-thirds of its sales from North America, said the bulk of its revenue growth last year came from emerging markets, including India and China.
“We should see more balance going forward,” Lamach said. “We made a deliberate effort to move talent and capital into these markets.”
Growth in emerging markets and in Ingersoll’s parts and services businesses will help the company increase revenue 5 percent to 7 percent in its 2013 and 2014 fiscal years, Lamach forecast. Operational improvements, including “lean” manufacturing, will enable the company’s earnings from continuing operations to increase 15 percent to 20 percent in 2013 and 2014.
Ingersoll, which also makes security systems including Schlage locks, as well as golf carts and industrial compressors, has increased profit margins in each of the last two years, so an eventual recovery in new construction markets will be a strong “tailwind.”
North American non-residential construction remains about 20 percent below its pre-recession peak, while U.S. home construction is some 36 percent below peak, the company said.
Ingersoll, whose competitors include United Technologies’ Carrier unit and Lennox International, closed on its $9.4 billion purchase of air conditioner maker Trane in 2008 just as the United States was entering a recession.
Heating and cooling systems made up 54 percent of its 2011 sales of $14 billion.