Diversified industrial manufacturer Eaton Corporation today announced record net income per share of $1.71 for the third quarter of 2007, an increase of 6 percent over net income per share of $1.62 in the third quarter of 2006. Sales in the quarter were a record $3.30 billion, 7 percent above the same period in 2006. Net income was $258 million compared to $248 million in 2006, an increase of 4 percent.
Net income in both periods included charges related to the integration of acquisitions. Before these acquisition integration charges, operating earnings per share in the third quarter of 2007 were $1.79 versus $1.65 in 2006, an increase of 8 percent. Included in the third quarter results was a gain from discontinued operations of $0.12 per share, which compares to a gain of $0.24 per share in the third quarter of 2006. Without those gains, operating earnings per share in the third quarter 2007 were $1.67 versus $1.41 in 2006, an increase of 18 percent.
Alexander M. Cutler, Eaton chairman and chief executive officer, said, “We are pleased with our third quarter results. Sales growth of 7 percent in the quarter consisted of 1 percent from organic growth, 3 percent from acquisitions, and 3 percent from exchange rates. We outgrew our end markets by 5 percent this quarter, which was offset in large part by a 4 percent reduction in our end markets, resulting in 1 percent organic growth.
“Eaton’s diversification strategy is working. Our improved geographic and business balance allowed us to post record earnings per share in the third quarter despite a 55 percent decline in the NAFTA heavy-duty truck market,” said Cutler. “For the second quarter in a row, our Electrical and Fluid Power businesses made up almost 70 percent of segment operating profits.”
The Truck segment posted sales of $541 million in the third quarter, down 16 percent compared to 2006. Operating profits were $95 million, down 23 percent from results in 2006.
In the third quarter, NAFTA heavy-duty truck production was down 55 percent compared to 2006, NAFTA medium-duty truck production was down 38 percent, European truck production was down 4 percent, Brazilian vehicle production was up 23 percent, and Brazilian agricultural equipment production was up 65 percent.
“Third quarter production of NAFTA heavy-duty trucks totaled 45,000 units, the same as in the second quarter,” said Cutler. “We expect that production in the fourth quarter will rise only modestly and that, as a result, full-year NAFTA heavy-duty truck production will be about 210,000 units. The lower volumes in the NAFTA heavy-duty truck market are being offset somewhat by strong conditions in the Brazilian vehicle and agricultural equipment markets.
“We are very pleased with the 17.6 percent operating margin posted by our truck business in the quarter,” said Cutler. “The margin reflects the diversity of our products and operating geographies, as well as the success of our reconfigured manufacturing footprint.”