Power management company Eaton Corp. capped its third quarter with higher-than-expected profit margins but lower net income due to charge-offs related to an arbitration decision in August against certain business units of Cooper Industries, a company that Eaton acquired in 2012.
“We had a solid third quarter,” said Craig Arnold, Eaton’s chairman and CEO. “Revenue growth was strong and we had record segment margins.”
Sales in the three-month period ending Sept. 30 were up 4% to $5.4 billion from $5.2 billion in 2017 with total segment operating profit of $952 million — 17.6% of net sales — compared with $856 million, or 16.4% of net sales, last year, the company said in an Oct. 30 press release.
Earnings per share were $416 million, or 96 cents a share, but would have stood at $1.43 a share if not for arbitration expenses of $275 million.
Arnold said the company posted record profit margins in three business segments: Electrical products, electrical systems and services and aerospace.
Sales of electrical products generated operating profits of $343 million on sales of $1.8 billion in the third quarter of 2018, compared to operating profits of $330 million on sales of $1.8 billion in 2017.
Electrical systems and services’ operating profit increased to $234 million from $196 million and sales rose to $1.5 billion from $1.4 billion.
Aerospace operating profit was $105 million, compared with $84 million a year ago. Sales climbed to $478 million from $438 million.
Hydraulic segment operating profit was $94 million in the third quarter, compared with $80 million a year ago. Sales were $670 million compared with $634 million.
Vehicle segment operating profit was $166 million in 2018 compared with $150 million in 2017, with sales of $876 million compared with $858 million.
Operating profit in the eMobility segment was $10 million compared with $16 million in the prior year due to increased research and development expenses. Sales rose to $80 million from $75 million.
Based on results so far, Arnold said the company now expects earnings per share for the year to be $5.35, an increase of 5 cents a share from previous guidance and a 15% increase over results in 2017.
Eaton, which maintains its corporate headquarters in Dublin, Ireland, employs about 98,000 people and sells products in more than 175 countries.