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Eaton Corp. reported lower net income and revenue in the third quarter, but called it a stronger than expected performance.
Net income for the period ended Sept. 30 fell to $447 million, or $1.11 per diluted share, compared with $602 million, or $1.44, a year earlier.
Revenue decreased to $4.5 billion compared with $5.3 billion in the same 2019 period.
“Our third quarter was stronger than expected, with organic sales down 9%, 6% better than the midpoint of our guidance range, and up 16% over the second quarter. We are pleased with our solid results despite the impact of the COVID-19 pandemic,” Eaton Chairman and CEO Craig Arnold said in a release.
Its largest business segment, electrical Americas, 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.
“Our priorities are largely around the electrical segment,” Arnold said during the Nov. 3 earnings call. “We continue to move the company to becoming an intelligent power management company.”
Its vehicle segment posted revenue of $573 million, down 25% from $761 million in the third quarter of 2019. Organic sales were down 20%. The divestiture of its automotive fluid conveyance business at the end of last year reduced revenues by 4%, and currency translation was negative 1%.
“Conditions have improved in vehicle markets and we are seeing higher NAFTA Class 8 production as well as increased global light vehicle production,” said Arnold. “We expect these trends to continue through year end.”
He noted the vehicle segment’s 20% decline in organic revenue was “once again much better than what we expected. We had a 32% decline in the midpoint of our guidance. And both light-vehicle and truck markets have rebounded more quickly than we anticipated.”
Operating profit in the vehicle segment — which manufactures engine air management, traction control, fluid conveyance and powertrain products for passenger and commercial vehicles — dropped 42% to $80 million compared with $139 million a year earlier. The operating margin was 14% compared with 18.3% in the 2019 period.
Eaton forecast 2020 North American Class 8 production will be 200,000 units, up from its prior forecast of 175,000.
In its eMobility segment, its smallest, sales were $79 million, flat with the third quarter of 2019. Organic sales were down 1%, which was offset by positive currency translation of 1%.
The operating margin was negative 2.5% compared with a margin of 5.1% a year earlier, and it posted an operating loss of $2 million compared with an operating profit of $4 million a year earlier.
EMobility is a 2-year-old business within Eaton that combines elements of its electrical and vehicle businesses to deliver electric vehicle solutions to passenger car, commercial vehicle and off-highway original equipment manufacturers.
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