UTC announced on Monday that it will pursue the separation of its Sikorsky helicopter business, subject to final board approval. “Our strategic review has confirmed that exiting the helicopter business is the best path forward for United Technologies,” said UTC president and CEO Gregory Hayes.
According to the U.S.-based group, removing Sikorsky from the portfolio will “better position UTC to focus on providing high-technology systems and services to the aerospace and building industries.” However, the parent company still has to decide whether the move will be in the shape of a sale or a spinoff, and that choice will probably be announced by the end of July, according to Hayes.
Excluding Sikorsky, UTC continues to expect organic sales growth of 3 to 5 percent annually. In March the company released a comparative chart where Sikorsky appeared to be lagging rival helicopter manufacturers, with a margin slightly greater than 10 percent in 2014 and a projected annual growth of about 3 percent through 2023.
More recently, a decline in Sikorsky’s operational expectations for the year—attributed to weakness in the oil-and-gas market—negatively impacted earnings per share by $0.10. A plan for 1,400 job cuts was announced earlier this month. Commercial sales have been much slower than hoped and total Sikorsky sales this year will therefore be down by a single-digit percentage, according to a revised outlook. For the longer term the outlook remains positive as the target revenue is $10 billion by 2025, compared with $7.5 billion last year. Speaking at an investor meeting on Monday, Hayes said Sikorsky is “still a great company.”