Industrial conglomerate Tyco International Ltd posted a 40-per-cent decline in quarterly net profit, but beat estimates, helped by revenue from services across its divisions.
Net earnings fell to $287-million (U.S.), or 60 cents per share, in the third quarter ended June 26, from $476-million, or 98 cents per share, a year earlier, the company said Thursday.
Earnings from continuing operations were 58 cents a share, excluding special items. On that basis, analysts expected 45 cents, according to Reuters Estimates.
Revenue fell 19 per cent to $4.24-billion, compared with Wall Street expectations for sales of $4.28-billion. Tyco said services, including recurring revenue such as monthly contracts, now account for 40 per cent of total sales.
The biggest sales decline came in Tyco's electrical and metal products division, where revenue slumped by one-half, reflecting weak global demand for products used in electrical infrastructure. The segment was the only one of five divisions to post an operating loss.
Sales were down 10 per cent in Tyco's biggest segment, ADT Worldwide, reflecting weak demand for security systems among commercial customers in North America and Europe. But recurring revenue rose, and the segment boosted its profit margin by cutting costs.
Tyco, which this year reincorporated from Bermuda to Switzerland and lost its spot in the S&P 500 index, did not immediately update its full-year profit outlook. In April, it forecast earnings from continuing operations of $2.15 to $2.25 per share.
The company has said it is increasingly focusing on three core areas: security products and services; fire products and services; and flow control technology.
Tyco shares closed Wednesday at $28.80. The stock is up 90 per cent from their 52-week low in November, far outperforming its industrial peers, as measured by the S&P capital goods index which is up 21 per cent in that time frame.