Eaton Corp.'s CEO predicts $16 billion in sales by year's end as company reports sales up 21 percent

Eaton Corp. is heading toward all-time sales and profit records despite the uncertainties about government debt here and around the globe and their impact on economic growth.

The world's growing preoccupation with energy and energy efficiency has a lot to do with Eaton's forecast Monday that it will sell more than $16 billion in industrial equipment this year -- up by nearly a fifth over last year. About 55 percent of Eaton's sales are outside the United States.

"People are recognizing that energy prices are going to do nothing but go up from here, and they are investing in those types of solutions that will enable them to reduce their energy costs," said Alexander "Sandy" Cutler, Eaton's chairman, president and chief executive officer.

"That is the great mega-trend that Eaton has been attached to for some time since we are a power management company," he said in an interview after releasing the company's financial results for the second quarter.

The Cleveland company is a diversified global manufacturer of power management technologies. The company employs 73,000 worldwide, including divisions here in Cleveland, Euclid, Parma and Aurora, but does not release employment information on a country-by-country basis.

Eaton manufacturers everything from transmissions, clutches and hybrid systems for heavy-duty trucks, to hydraulics for agricultural equipment, from components for aircraft to superchargers and engine valves for cars, from hydraulic systems for wind turbines to the electrical guts of solar arrays, from electrical equipment for buildings to electronic power conditioning systems for computer data centers.

Cutler said the company expects sales to grow by 19 percent this year compared to 2010 and profits to increase by 42 percent to more than $4 per share of stock - both records for the company that turns 100 years old in a few months.

During the second quarter -- April through June -- Eaton's profits soared by 49 percent to $336 million, or 97 cents per share. That compares to $226 million, or 66 cents per share, in the second quarter of 2010, the company's financial report shows.

Sales for the second quarter were $4.09 million, up 21 percent from the $3.38 million in the same period last year.

Each of Eaton's five business segments showed double-digit growth in the second quarter compared to the same period last year, both in sales and profits.

"We are completing a very strong second quarter, a strong second half and what we expect to be a record year in both sales and profits," Cutler told financial analysts in a public teleconference, now available on the investor relations section of Eaton's web site.

Cutler added that at this point, sales and profits in 2012 look healthy as well. He said the company estimates that global manufacturing will increase by 5.2 percent next year.

But for the rest of this year, Cutler said sales should exceed $16 billion. The accelerating business growth this year have already prompted the company to adjust its 2011 sales and earnings forecast four times.

In January, the company forecast an 8 percent market growth, in February, 9 percent, in April, 10 percent and now 11 percent. The company expects this year's net earnings, or profits, to run between $3.90 and $4.10 per share. That's up from a January forecast of $3.50 to $3.80 per share.

Eaton's financial results beat analysts' predictions. The company's share price on the New York Stock Exchange increased by $1.43 to $52.59 per share.