United Technologies 2011 Annual Report Download - page 37

MANAGEMENT’S DISCUSSION AND ANALYSIS
SEGMENT REVIEW
NET SALES OPERATING PROFITS OPERATING PROFIT MARGIN
(Dollars in millions) 2011 2010 2009 2011 2010 2009 2011 2010 2009
Otis $ 12,437 $ 11,579 $ 11,723 $2,815 $2,575 $2,447 22.6% 22.2% 20.9%
Carrier 11,969 11,386 11,335 1,520 1,062 740 12.7% 9.3% 6.5%
UTC Fire & Security 6,895 6,490 5,503 692 714 493 10.0% 11.0% 9.0%
Pratt & Whitney 13,430 12,935 12,392 1,999 1,987 1,835 14.9% 15.4% 14.8%
Hamilton Sundstrand 6,150 5,608 5,560 1,082 918 857 17.6% 16.4% 15.4%
Sikorsky 7,355 6,684 6,287 840 716 608 11.4% 10.7% 9.7%
Total segment 58,236 54,682 52,800 8,948 7,972 6,980 15.4% 14.6% 13.2%
Eliminations and other (46) (356) (375) (430) (409) (255)
General corporate expenses ———(419) (377) (348)
Consolidated $58,190 $54,326 $ 52,425 $8,099 $ 7,186 $ 6,377 13.9% 13.2% 12.2%
Commercial Businesses
The financial performance of our commercial businesses can
be influenced by a number of external factors including
fluctuations in residential and commercial construction
activity, regulatory changes, interest rates, labor costs,
foreign currency exchange rates, customer attrition, raw
material and energy costs, credit markets and other global
and political factors. Carrier’s financial performance can also
be influenced by production and utilization of transport
equipment, and for its residential business, weather
conditions. Geographic and industry diversity across the
commercial businesses help to balance the impact of such
factors on our consolidated operating results, particularly in
the face of uneven economic growth. During 2011, we saw
strong but moderating growth in the emerging markets, with
combined orders in Brazil, Russia, India and China increasing
19% in 2011 as compared with 2010, and tapering to 8% in the
fourth quarter of 2011, as compared to the same period in
2010. Otis’ new equipment orders in China were strong for
the year (28%), but slowed during the fourth quarter to 13%.
Organic sales growth within our commercial businesses was
led by Carrier (9%) in 2011, principally on strength in the
transport refrigeration markets.
In 2011, 72% of total commercial business sales were
generated outside the United States, including U.S. export
sales, as compared to 71% in 2010. The following table shows
sales generated outside the U.S., including U.S. export sales,
for each of the commercial business segments:
2011 2010
Otis 83% 82%
Carrier 58% 56%
UTC Fire & Security 77% 78%
Otis is the world’s largest elevator and escalator manufacturing, installation and service company. Otis designs, manufactures,
sells and installs a wide range of passenger and freight elevators for low-, medium- and high-speed applications, as well as a
broad line of escalators and moving walkways. In addition to new equipment, Otis provides modernization products to upgrade
elevators and escalators as well as maintenance and repair services for both its products and those of other manufacturers.
Otis serves customers in the commercial and residential property industries around the world. Otis sells directly to the end
customer and through sales representatives and distributors.
TOTAL CHANGE YEAR-OVER-YEAR FOR:
2011 Compared with 2010 2010 Compared with 2009
(Dollars in millions) 2011 2010 2009 $% $%
Net Sales $12,437 $11,579 $11,723 $858 7% $ (144) (1)%
Cost of Sales 8,090 7,540 7,830 550 7% (290) (4)%
4,347 4,039 3,893
Operating Expenses and Other 1,532 1,464 1,446
Operating Profits $2,815 $ 2,575 $2,447 $240 9% $ 128 5 %
2011 ANNUAL REPORT 35