Eaton revises third quarter outlook

 

CLEVELAND, OHIO…Eaton Corporation (NYSE:ETN) today announced that it expected operating earnings per share in the third quarter of 2000 to be flat to down 10 percent from the $1.45 it reported in the year earlier quarter. This compares to current third quarter consensus estimates of about $1.55 per share. The company also said that it anticipated that fourth quarter earnings would be near the current analyst consensus estimates of about $1.75 per share.

Alexander M. Cutler, Chairman and Chief Executive Officer, said, "This revision in third quarter expectations is due largely to unanticipated events in our North American truck and automotive markets. Production of heavy duty trucks has plummeted at an unprecedented rate over the past six months and we have been unable to reduce costs and resources at the same pace as the decline in our orders and shipments. Compounding the compression in margins during this period of market weakness has been a marked shift to basic fleet transmissions from our higher-valued automated products. We are sizing the business to the roughly 200,000 annual rate of production anticipated in the fourth quarter, and expect better performance as the market stabilizes.

"Performance in our automotive business has been hurt by the renewed weakening of the euro, the slowdown in third quarter automotive production and, especially, by the production cutbacks announced by Ford, where Eaton enjoys particularly high content on Ford's Explorer and light truck platforms."

The company said its Industrial & Commercial Controls business continues to perform very well, and will achieve an all-time performance record in the current quarter. Axcelis Technologies, Inc., Eaton's 82 percent-owned semiconductor equipment subsidiary, is also continuing to take full advantage of robust industry conditions.

"The third quarter performance of the company's Fluid Power segment will be affected somewhat by softer industry conditions and an acceleration of manufacturing integration activities," said Cutler. "However, we remain on plan for achieving our full-year performance target for the Aeroquip-Vickers acquisition." Last week Eaton completed the acquisition of the Hydro-Line industrial cylinder business from IMC, an important strategic move to strengthen and leverage its Industrial Hydraulics business.

With 1999 sales of $8.4 billion, Eaton is a global diversified industrial manufacturer of highly engineered products that serve industrial, vehicle, construction, commercial, aerospace and semiconductor markets. Principal products include hydraulic products and fluid connectors, electrical power distribution and control equipment, truck drivetrain systems, engine components, ion implanters and a wide variety of controls. Headquartered in Cleveland, the company has 64,000 employees and 200 manufacturing sites in 24 countries. This news release contains forwarding looking statements concerning the Company's expected operating earnings per share in the third and fourth quarters, the annual rate of production for the heavy-duty truck market in the fourth quarter and the performance of the Industrial & Commercial Controls business and of the Fluid Power segment. Actual results could differ materially from these forward-looking statements since they inherently are subject to risks and uncertainties. Important factors which could cause such a difference include market demand for heavy-duty trucks, the ability to manage costs in the Truck Components segment, market demand relating to the automotive business including production cutbacks by Ford, fluctuations in the value of the euro, market demand in the Fluid Power segment, our ability to successfully integrate the Aeroquip-Vickers operations and global economic and market conditions. We do not assume any obligation to update these forward-looking statements

 

 

Contact Information

Renald Romain
216-523-4736
rennyromain@eaton.com