The slowing global economy and turmoil in the credit markets has clouded the outlook for top diversified U.S. manufacturers, executives warned today.
Companies including United Technologies, Textron and Danaher told investors they were taking aggressive steps to cut costs as they brace for slowing demand, even as sale of their big-ticket elevators, jets and water treatment systems remained strong.
Some executives said the long lead times for their products - some of which are ordered years in advance - would help them navigate a slowing economy.
"While we did see order rates slow in some businesses in the quarter given the current turmoil, our backlogs across UTC remain strong," said Louis Chenevert, United Tech's president and chief executive, in a statement.
Still, he said, "in the face of ongoing economic challenges, we continue to aggressively cut costs and restructure our business."
The world's largest maker of elevators and air conditioners reported third-quarter profit that topped Wall Street's expectations and raised the low end of its forecast for the rest of the year - but offered little inkling of 2009.
Several executives said the credit crunch - which started with bad loans to US home buyers and has spiraled into a global crisis that has prompted unprecedented US intervention in the commercial credit markets - was taking a toll on their business.
Parker Hannifin, which makes fluid and motion control systems and is just starting its fiscal year, warned conditions were deteriorating.
"There is enough uncertainty in many of our end markets and sentiment among our customers to warrant a downward revision in our earnings expectations," said chairman and chief executive Don Washkewicz.
Even as it reported a fiscal first-quarter profit that topped analysts' expectations, the company cut the midpoint of its full-year forecast by 5 percent, allowing for the possibility of an earnings decline this fiscal year.
Danaher, an industrial conglomerate that makes the Craftsman brand of tools, reported higher profit from continuing operations, beating Wall Street's forecast. It set a target for fourth-quarter profit that was below consensus.
"Clearly, the events of the last several weeks have created a level of uncertainty with respect to the global economy," said H. Lawrence Culp, the company's president and chief executive, in a statement.
In a sign of how seriously the company is taking the downturn, Danaher said it would cut more than 1,000 jobs and close a dozen facilities to cut costs.
Textron, the world's largest maker of corporate jets, reported a 19 per cent profit drop that was worse than analysts had expected, as the credit crunch hammered its finance arm, offsetting strong manufacturing results.
It warned investors that fourth-quarter profit from continuing operations would tumble and unveiled