Eaton warns on 2Q, '01
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June 26, 2001: 8:13 a.m. ET
Diversified manufacturer warns it has not seen bottom as weakness spreads
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NEW YORK (CNNfn) - Diversified manufacturer Eaton Corp. warned Tuesday that its second-quarter and full-year earnings per share will be below expectations.
The company, whose products include auto parts, fluid power systems and electrical power equipment, said it will earn 20 to 30 percent less than the consensus $1.21 a share forecast for the current period.
Eaton (ETN: Research, Estimates) also said it expects full-year EPS of $4.05 to $4.20. Analysts surveyed by earnings tracker First Call forecast $4.73 for the year.
The Cleveland-based company had confirmed its full-year guidance as recently as April 16 as it released first-quarter results. But it said it has seen a sharp decline in all of its North American businesses during the quarter, with the exception of aerospace, and warned conditions probably will get worse.
While Eaton's sales have tracked at or above the trend of our markets, we have not been able to reduce structural costs as quickly as the decline in these businesses," CEO Alexander Cutler said. "Further, while we are hopeful that, in aggregate, we are seeing a bottoming in activity levels, there is no convincing evidence that our North American markets will rebound meaningfully before year-end. In addition, European, Asian and, to a lesser extent, South American markets are beginning to decline in lagged response to the North American weakness."
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Eaton's truck business still is its core operation, and it said a restructuring there during the first quarter will allow it to break even in the second quarter. Despite overseas growth the United States still accounts for a majority of revenue.
Eaton shares lost 63 cents to $70.93 Monday ahead of the warning.
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Eaton
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