Eaton Corporation plc (ETN) has reported a 5.26 percent fall in profit for the quarter ended Dec. 31, 2016. The company has earned $504 million, or $1.12 a share in the quarter, compared with $532 million, or $1.15 a share for the same period last year.
Revenue during the quarter dropped 3.76 percent to $4,867 million from $5,057 million in the previous year period. Gross margin for the quarter contracted 43 basis points over the previous year period to 31.81 percent. Total expenses were 88.90 percent of quarterly revenues, up from 88.06 percent for the same period last year. That has resulted in a contraction of 85 basis points in operating margin to 11.10 percent.
Operating income for the quarter was $540 million, compared with $604 million in the previous year period.
Craig Arnold, Eaton chairman and chief executive officer, said, "Our fourth quarter net income and operating earnings per share were above the midpoint of our guidance despite fourth quarter sales coming in 1 percent lower than our expectations. The shortfall in sales resulted solely from higher negative currency translation due to the rise in the U.S. dollar following the U.S. election. Our organic sales for the quarter came in slightly better than expected, and some segments showed modestly improved order trends."
For the first-quarter 2017, The company expects diluted earnings per share to be in the range of $0.80 to $0.90.
For fiscal year 2017, The company expects diluted earnings per share to be in the range of $4.30 to $4.60.
Working capital drops significantly
Eaton Corporation plc has witnessed a decline in the working capital over the last year. It stood at $1,456 million as at Dec. 31, 2016, down 26.87 percent or $535 million from $1,991 million on Dec. 31, 2015. Current ratio was at 1.27 as on Dec. 31, 2016, down from 1.43 on Dec. 31, 2015.
Cash conversion cycle (CCC) has increased to 41 days for the quarter from 39 days for the last year period. Days sales outstanding went up to 34 days for the quarter compared with 32 days for the same period last year.
Days inventory outstanding was almost stable at 31 days for the quarter, when compared with the last year period. At the same time, days payable outstanding was almost stable at 24 days for the quarter, when compared with the previous year period.
Debt comes down marginally
Eaton Corporation plc has recorded a decline in total debt over the last one year. It stood at $8,277 million as on Dec. 31, 2016, down 1.63 percent or $137 million from $8,414 million on Dec. 31, 2015. Total debt was 27.21 percent of total assets as on Dec. 31, 2016, compared with 27.11 percent on Dec. 31, 2015. Debt to equity ratio was almost stable at 0.55 as on Dec. 31, 2016, when compared with the last year. Interest coverage ratio deteriorated to 9 for the quarter from 10.60 for the same period last year.
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