Manufacturers grow as US demand offsets weak Europe

Big U.S. manufacturers continued a wave of strong earnings growth, with United Technologies Corp., 3M Co, Illinois Tool Works and Parker-Hannifin Corp. posting results that topped Wall Street forecasts .

Recovering demand at home helped all four companies offset a very weak European economy and slowing growth in China, which until recently had been a reliable source of rapid growth for big U.S. companies.

3M, ITW and Parker-Hannifin all raised their full-year profit forecasts on Tuesday, while United Tech held its outlook steady, citing concerns about an uneven global economy.

"We have seen some encouraging signs in the United States over the last several months," said United Tech Chief Financial Officer Greg Hayes, noting that sales of Carrier air conditioners had picked up since mid-March.

"Europe remains awful," Hayes told reporters. "The markets there for commercial construction have really been anemic and continue to be."

Fellow blue-chip 3M, which makes products ranging from Post-It notes to films used in flat-screen televisions, sounded a brighter note.

"We are off to a very good start in 2012," said Inge Thulin, who in February became 3M's chief executive, in a statement.

The company saw growth in the Americas, stabilizing European sales and weakness in Asia, primarily in China, Japan and at the company's unit that sells components to consumer electronics makers, noted BernsteinResearch analyst Steven Winoker.

"In his first reporting quarter as CEO, Inge Thulin and the company managed to offset the headwinds," Winoker said.

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3M raised the low end of its 2012 profit forecast by a dime, saying it now looks for earnings of $6.35 US to $6.50 per share, which would represent growth of about 8 percent.

ITW, which makes construction materials, welding equipment and restaurant supplies, said it now looks for profit of $4.14 to $4.38 per share, up 12 cents from its prior forecast, for about 13 percent profit growth.

Much of ITW's raised profit forecast reflected a stock buyback; the company trimmed its revenue forecast slightly.

Parker-Hannifin, a maker of control systems for manufacturing and transportation, raised its full-year profit forecast to a range of $7.30 to $7.50 per share, up from its January forecast of $6.90 to $7.30 per share. The new target would mean growth of about 16 percent.

United Tech was the one holdout, keeping its forecast steady at a range of $5.30 to $5.50 per share, representing growth of about 2 percent. After missing Wall Street's revenue targets, the company said it would boost restructuring spending in a bid to improve profit margins.

Parker-Hannifin shares rose 5.5 percent to $85.44, 3M rose 2.4 percent to $89.25, ITW rose 2 percent to $56.36 and United Tech rose 0.8 percent to $80.39. All four companies trade on the New York Stock Exchange.

United Tech's caution likely reflected its complicated year -- the company is closing on its largest-ever acquisition, a $16.5 billion buy of Goodrich Corp and trying to sell three smaller businesses to help fund it without selling more common shares.

"They're in the process of trying to reposition their portfolio and it's not happening as quick as they want," said Catherine Avery, president and CEO of CAIM LLC, who holds shares of United Tech and ITW.

One of Avery's worries for the sector is that while many of the companies she tracks are forecasting a stronger second half of the year but it's not clear key markets like China will turn around by then.

"What concerns me is that China has slowed down so much," she said.