Ingersoll net jumps on Bobcat gain
NEW YORK (Reuters) - Diversified manufacturer Ingersoll-Rand Co. Ltd's <IR.N> quarterly net profit jumped due to a large gain on the sale of its Bobcat machinery division, but results fell slightly short of Wall Street forecasts.
The company also said it would take a break from buying and selling businesses for up to the next two years, focusing instead on integration after its $9.5 billion purchase of Trane Inc <TT.N>.
Fourth-quarter net earnings were up tenfold to $2.5 billion, or $9.06 per share, compared with $222 million, or 72 cents per share, a year earlier.
The net profit included $9.30 per share for the sale of the Bobcat unit, offset by a charge for asbestos claims. Ingersoll sold the Bobcat unit to South Korea's Doosan Infracore <042670.KS> for $4.9 billion last year.
Stripping out the gain, the impact of a higher tax rate, and other items, the company earned 97 cents a share, which was 2 cents below average analyst forecasts, Reuters Estimates said.
"While the earnings included a significant number of 'puts and takes,' the ongoing operations performed a little better than expected," Bear Stearns analyst Ann Duignan said in a research note.
Quarterly revenue rose 8 percent to $2.32 billion, slightly ahead of Wall Street forecasts. About half the sales increase was attributed to a weak U.S. dollar, Ingersoll said.
Ingersoll said it expects slow growth this year in North America and Western Europe, offset by brisk growth in emerging markets. Sales will be up 6 percent to 7 percent this year, it estimated, led by its industrial segment.
Assuming the Trane deal's completion on May 31, Ingersoll projected full-year earnings from continuing operations in a range of $3.80 to $3.90 per share. The forecast does not reflect one-time charges of 40 cents to 45 cents per share.
The company's outlook was "consistent" with earlier estimates, although the May 31 estimated closing date for the Trane deal is later than initially thought, Bear Stearn's Duignan said.
The sale of the Bobcat machinery division was a divestment that helped generate cash for the Trane deal.
Ingersoll, which in December agreed to buy Trane to expand its climate technologies business, expects no major acquisitions or divestitures over the next 18 to 24 months.
"With the acquisition of Trane, the major heavy lifting of portfolio change has been accomplished," CEO Herb Henkel told analysts on a conference call. "I don't expect many acquisitions or divestitures over that time frame."
The focus through 2010 will be integrating Trane and taking advantage of the "synergies" from the deal, which will close during the second quarter, Henkel said. Annual cost savings are expected to top $300 million by 2010.
After the deal, the heating and cooling equipment segment will make up more than two-thirds of total company sales.
Ingersoll shares were down 6 cents at $39.93 in morning trading on the New York Stock Exchange. They are down about 18 percent since the Trane deal was announced on Dec 17, lagging the Standard & Poor's 500 index <.SPX> in that time span.
(Reporting by Nick Zieminski; Editing by Steve Orlofsky and Dave Zimmerman)