United Tech third quarter profit falls

United Technologies Corp, one of the top US aerospace and building systems conglomerate announced a slight drop in its third quarter earnings. According to the report, the United Technologies' income fell to $1.36 billion compared to $1.85 billion in 2014. The company also announced a major restructuring plan that will be carried out before 2016 as a strategy to cut cost and improve company's revenue.

The company's stock is also performing badly as it shares declined to $1.61 per share from its $1.93 per share last year as reported by the Channel News Asia. The company blamed current economic situation as the major cause for sales drop which causes the currency swing and making its product cost higher than usual.

Besides that, The Fiscal Times also reported that the delay in jet engine deliveries as another factor causing the drop and the company's revenue will increase as quickly in the next quarter. Currently, its revenue fell 5.7 percent compared to last quarter earnings report to $13.79 billion.

Another major announcement was made by the company together with the earnings report. The company is planning to buyback $12 billion worth of its own stock as a way to have more controls over the company. The shares buyback includes a $6 billion from accelerated shares buyback which is expected to be completed by the fourth quarter using the profit obtained from its sale of Sikorsky helicopter unit.

This is the second buyback that the company will make after it has completed $4 billion buybacks this year according to Reuters. The company's Chief Executive Officer, Greg Hayes told analysts the rationale behind the move "There is such a disconnect between the trading price and the intrinsic value that we find that doing share buyback is the best M&A that we can do in the short run. We're looking at those deals in the $1 (billion) to $5 billion range and clearly we have the capacity to continue to do those deals."

As for the company restructuring plan, Hayes said that the United Tech believe that it can further reduce its overhead cost through restructuring. Although he did not specify on whether there will be a layoff or not, Hayes said that the company is planning to do "factory rationalization" and will announce the plan in December this year.

The restructuring plan is predicted by some analyst as the company is known for conducting restructuring to increase its revenue by cutting down on operational cost.