Pratt & Whitney, a United Technologies Corporation (UTX) company, has received a $33.8 million contract from the Defense Advanced Research Projects Agency for developing the Constant Volume Combustion (CVC) engine technology.
CVC technology has the potential to significantly reduce fuel consumption of the U.S. Navy surface combat vehicles and increase overall efficiency. CVC engines burn fuel at a constant volume and are considerably more efficient than conventional engines, which burn fuel at constant pressure.
United Technologies has a strong market position in aerospace/defense and global infrastructure with a portfolio that includes Carrier, Otis, Hamilton Sundstrand, Pratt & Whitney, Sikorsky and Fire & Security. The company invests in game-changing technology across its businesses, with its Aerospace companies continuing to make progress on their key development programs.
For example, the Pratt GTF core has accumulated more than 260 hours, validating the performance expectations, and Sikorsky’s Canadian Maritime helicopter continues its successful flight testing with first deliveries scheduled for the end of the year.
The company is expected to deliver double-digit earnings growth in 2010, given restructuring savings and an improving end-market environment. Emerging markets continued to do well, with particular strength in India and Brazil, where combined orders for the commercial business units grew by over 25% during the second quarter of 2010.
In addition to restructuring savings, the company is also seeing the benefits of other cost reduction actions in areas such as travel, furloughs and E&D employee attrition. The company’s cost reduction initiatives have led to a year-over-year increase in its consolidated and segment margins and have also expanded earnings.
The company’s most significant actions were at Carrier, related to the ongoing portfolio transformation initiatives in overhead cost reduction projects, and at Hamilton Sundstrand, which continued to advance its low-cost sourcing strategy.
The financial performance of the company depends on conditions in the construction and aerospace industries. The company is also highly dependent on the U.S.government’s budgetary allocation for defense.
A reduction in capital spending in the commercial aviation or defense industries could have a significant effect on demand for United Technologies’ products, which could have an adverse effect on its financial performance or its results of operations. Its business may also be affected by government contracting risks.
Pratt & Whitney is among the world’s leading suppliers of aircraft engines for the commercial, military, business jet and general aviation markets. Its Global Services provides maintenance, repair and overhaul services, including the sale of spare parts, as well as fleet management services for large commercial engines.
The United subsidiary produces engines for wide and narrow-bodied aircraft in the commercial and military markets. It also sells engines for industrial applications and space propulsion systems.
United Technologies Corporation provides high technology products and services to the building systems and aerospace industries worldwide. Growth is attributable to acquisitions and the internal development of existing businesses. Otis, Carrier and UTC Fire & Security (collectively referred to as the commercial businesses) serve customers in the commercial and residential property industries worldwide.
Carrier also serves commercial, industrial, transport refrigeration and food service equipment customers. Pratt & Whitney, Hamilton Sundstrand and Sikorsky (collectively referred to as the aerospace businesses) primarily serve commercial and government customers in both the original equipment and aftermarket parts and services markets of the aerospace industry; Hamilton Sundstrand and Pratt & Whitney also serve customers in certain industrial markets.
We currently have a Neutral recommendation on United Technologies Corporation.
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