* United Tech, 3M, ITW, Parker Hannifin top estimates
* U.S. demand picks up, particularly for air conditioners
* Europe remains weak, Chinese spending slows
* Industrial shares up
By Scott Malone and Nick Zieminski
April 24 The year ahead for U.S. industrial
companies is looking a little brighter than it seemed a few
months ago, as economic conditions improve in North America and
demand in key business segments strengthens.
Large manufacturers, led by 3M Co, Illinois Tool
Works Inc and Parker Hannifin Corp <Ph. n>, raised 2012
profit forecasts on Tuesday as they reported
The three posted results that topped Wall Street estimates,
and all raised their outlooks. United Technologies Corp
also beat forecasts but noted an uneven global economy and kept
its outlook steady.
"We have seen some encouraging signs in the United States
over the last several months," said United Tech Chief Financial
Officer Greg Hayes, noting that sales of Carrier air
conditioners had picked up since mid-March.
Fellow blue-chip 3M, which makes products ranging from
Post-It notes to films used in flat-screen televisions, cited
Europe, Japan and China as areas of concern but said growth
should pick up in the second half.
"I am confident in our ability to improve every aspect of
our company," said Chief Executive Ingle Thulium, who took over
from George Buckley this year.
Since forecasts are often based on orders for products with
long lead-times, analysts and investors say predictions of a
second-half rebound are credible, despite many uncertainties.
Companies that sell to the auto and aerospace industries
have done well this earnings season, said analyst Jeff Wind of
"Industrial markets have proved pretty solid, especially in
North America," he said. Pockets of weakness include anything
tied to consumer electronics, as 3M's results showed.
"It looks like there may be some uptick here in the second
half," Wind said, who noted that industrial stocks have pulled
back whenever fresh evidence of weakness emerges in Europe.
Any sign of improvement, or a move to stimulate Europe's
economies, would be a positive catalyst for shares that have
come off their highs ahead of earnings season, he said.
3M raised the low end of its 2012 profit forecast by a 10
cents, saying it now looks for earnings of $6.35 to $6.50 per
share, which would represent growth of about 8 percent.
ITW, which makes construction materials, welding equipment
and restaurant supplies, said it now looks for profit of $4.14
to $4.38 per share, up 12 cents from its prior forecast, for
about 13 percent profit growth. Much of ITT's raised profit
forecast reflected a stock buyback. The company trimmed its
revenue forecast slightly.
Parker Hannifin, a maker of control systems for
manufacturing and transportation, raised its full-year profit
forecast to a range of $7.30 to $7.50 per share. The new target
would mean growth of about 16 percent.
Parker also raised its dividend 5 percent, marking the 56th
straight year of higher payouts. Early indications suggest
fiscal 2013, which starts in July, will be another year of
growth for the company, CEO Don Washkewicz said.
Parker Hannifin shares rose 6.5 percent to $86.21, 3M rose
1.9 percent to $88.86, ITW rose 2.6 percent to $56.63 and United
Tech rose 0.7 percent to $80.30, all on the New York Stock
Their reports follow market-beating results from General
Electric Co, Innersole Rand Plc, Dana her Corp
and Eaton Corp. Eaton's CEO said on Monday the
U.S. economy was stronger than expected.
United Technologies said it would boost restructuring
spending to improve profit margins. Its caution reflected its
complicated year -- the company is closing on its largest-ever
acquisition, a $16.5 billion purchase of Goodrich Corp,
and trying to sell smaller businesses to help fund the
transaction without selling more common shares.
"They're in the process of trying to reposition their
portfolio and it's not happening as quick as they want," said
Catherine Avery, president and CEO of CAIMAN LLC, which holds
shares of United Tech and ITW, as well as Emerson Electric
, which reports next week.
One of Avery's worries for the sector is that while many of
the companies she tracks are forecasting a stronger second half
of the year, it is not clear key markets like China will turn
around by then.
"What concerns me is that China has slowed down so much,"
In other results on Tuesday, truck maker Paccar
lowered its forecast of European retail sales as it reported
market-beating earnings. Paccar said U.S. truckers were carrying
more freight and demanding more from their vehicles, which is
driving replacement demand.
Pentair, which makes water treatment and thermal
management products, beat on profits but disappointed on sales
and trimmed its full-year revenue outlook. Lincoln Electric
and Carlisle Cos beat Street estimates on both
earnings and sales.