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Power management company Eaton Corp. reported higher fourth-quarter net income and a decline in revenue.
“Our fourth quarter was stronger than expected, with organic sales down 5%, at the high end of our guidance range and up 3% over the third quarter,” Eaton Chairman and CEO Craig Arnold said in a release. “We are pleased with our solid results, as our businesses have managed through the impact of the COVID-19 pandemic well.”
For the quarter ended Dec. 31, Eaton posted net income of $476 million, or $1.18 per diluted share compared with $453 million, $1.09, a year earlier.
The gain in net income reflected a decline in the cost of products sold, a decrease in selling and administrative expense and a decline in research and development expense, among other factors compared with a year earlier.
Revenue slipped to $4.6 billion compared with $5.2 billion in the 2019 period.
The vehicle segment posted quarterly sales of $620 million, down 7% compared with the fourth quarter of 2019. Organic sales were down 1%, well above the high end of Eaton’s guidance range driven by better than expected recovery in Nafta Class 8 and global light vehicle production.
The divestiture of its automotive fluid conveyance business at the end of last year reduced revenue by 5%, and currency translation was negative 1%. Operating profits were $103 million, down 9% from the fourth quarter of 2019, excluding the clutch warranty issue reported in the fourth quarter of 2019, the Dublin-based company reported.
“Operating margins in the quarter were a strong 16.6%,” Arnold said. “Conditions have markedly improved in vehicle markets. Sales in the fourth quarter in the segment were up 8% over the third quarter, and we expect this sequential growth trend to continue well into 2021.”
Eaton’s commercial vehicle products include transmissions, clutches, and fluid and air conveyance solutions.
EMobility segment sales were $85 million, up 13% over the fourth quarter of 2019, driven by organic sales growth of 11% and positive currency translation of 2%. The segment recorded an operating loss of $5 million reflecting continued investment in research and development for new programs.
EMobility is a very hot space, Arnold said during an earnings call.
“For us, it’s not so much a focus on geographic solutions as much as it is a technology-driven solution,” he said. So we are really focusing on those areas around power electronics, power conversion, inverters, converters, power distribution, on-board charging. We are endeavoring to be a global player, serving the light-vehicle market and, importantly by the way, the commercial vehicle market, where we have a very strong footprint today.”
Its largest business segment, electrical Americas, Eaton posted revenue of $1.7 billion compared with $2 billion a year earlier. Electrical global had revenue of $1.2 billion compared with $1.3 billion in the 2019 period.
For the full year, net income fell to $1.4 billion, $3.49, compared with $2.2 billion, $5.25 a year earlier.
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Annual revenue was $17.8 billion. That compared with $21.3 billion a year earlier.
In related news, its Vehicle Group announced Jan. 27 it expanded the capabilities of its ServiceRanger 4 software, the computer diagnostics and service tool designed to support all Eaton automated manual transmissions, hybrid powertrain systems, Advantage Automated Series clutches and Eaton Cummins Automated Transmission Technologies.
A new App Center allows users to access additional apps used to service trucks. The first app available in SR4 Pro Plus is Eaton Advantage Automated clutch calibration software, which will allow dealers, fleets and independent repair facilities to calibrate a new Advantage Automated clutch from Eaton when installing on non-Eaton and non-Eaton Cummins transmissions, including popular models such as Detroit DT12, Volvo I-Shift and Mack mDRIVE automated transmissions. The clutch calibration software was developed in collaboration with the Cojali Group, a commercial vehicle research, development and innovation company based in Spain.
Eaton sells products to customers in more than 175 countries and has 92,000 employees.
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