Eaton is counting on lower expenses to help the company meet its 2009 earnings guidance in the midst of a decline in demand from the automotive industry and other major markets, chairman and CEO Alexander Cutler has said.
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Cutler said workforce reductions of more than 8,000 people since late 2008 would save Eaton at least US$200m this year, Dow Jones reported. Unpaid time off for employees still on the job, suspending pension contributions and other expense reductions will save an additional $170m.
He said the company consequently should be able meet its 2009 earnings forecast of $2.50 to $3 per share, despite earnings for the first and second quarters that are expected to be no better than break even. In the first quarter, the company posted a loss of $52m, or 30 cents a share.
Cutler told an investor conference in New York that temporary shut downs by General Motors and Chrysler would reduce North American auto production in the second quarter by about 470,000 vehicles.
He saw no more than a minimal increase in commercial truck purchases ahead of new diesel engine emissions regulations in 2010 that will raise the price of new trucks.
“The economic uncertainly [in trucking] is more than overwhelming the concerns about new technology,” he said.
