Eaton announced that second-quarter sales were $3.38 billion, 16 percent above the second quarter of 2009, and net income was $226 million, compared to $29 million in 2009.
Net income in both periods included charges for integration of acquisitions. Before these acquisition integration charges, operating earnings per share in the second quarter of 2010 were $1.36 compared to $0.23 per share in 2009, and operating earnings were $232 million compared to $39 million in 2009.
“Our earnings in the second quarter substantially exceeded our expectations for the quarter, driven primarily by stronger end markets,” said Alexander M. Cutler, Eaton chairman and chief executive officer. “Our sales in the second quarter were 9 percent higher than in the first quarter of 2010, reflecting the continued expansion in our markets around the world. While the debt problems in Europe are likely to slow the rate of growth in some European markets, and the rate of economic growth in China has moderated slightly, we anticipate solid global growth continuing during the second half of the year.
“Our operating cash flow for the quarter was $469 million, and our free cash flow was $405 million. We now believe that our operating and free cash flow for 2010 will be stronger by $50 million than our previous estimates.
“In light of our strong second quarter results and our improved outlook for the balance of the year, we are increasing our quarterly dividend by 16 percent, from $0.50 per share to $0.58 per share.
“As we survey our end markets, the year is shaping up to be better than we had forecast in April. We now anticipate our overall end markets will grow by 8 percent versus our earlier forecast of 6 percent.
Hydraulics segment sales were $568 million, up 34 percent compared to the second quarter of 2009. Global hydraulics markets were up 34 percent in the quarter, with U.S. markets up 40 percent and non-U.S. markets up 30 percent. Operating profits in the second quarter were $77 million compared to $14 million in the second quarter of 2009.
The Truck segment posted sales of $492 million in the second quarter, up 53 percent compared to 2009. Truck production in the second quarter was up 28 percent, with U.S. markets up 32 percent and non-U.S. markets up 24 percent. The segment reported operating profits of $59 million.
“We expect truck production in the second half to increase compared to the first half,” said Cutler. “Demand in NAFTA for Class 8 trucks is beginning to improve, as freight growth and the aging truck fleets are finally starting to generate an increase in truck orders. For all of 2010, we now anticipate our Truck markets will increase by 23 percent, stronger than our earlier expectations.
“Our margin of 12.0 percent in the second quarter was strong in light of the still very low NAFTA truck production levels.”