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Energy management company Eaton Corp. posted higher net profit and modest revenue gains in the fourth quarter, noting that revenue in its vehicle segment fell but rose slightly in eMobility – its two smaller segments.
For the quarter ended Dec. 31, Eaton reported net income of $551 million, or $1.37 per diluted share, on revenue of $4.7 billion. That compares with a net profit of $476 million, or $1.18, on revenue of $4.6 billion a year earlier.
The vehicle segment – its second smallest – recorded sales of $610 million, down 2% from $620 million in the fourth quarter of 2020, driven by an organic sales decline of 1% and a conversion currency negative of 1%. Operating profit fell 3% to $100 million from $103 million a year ago. Eaton expects the vehicle segment in 2022 to grow from 7.5% to 9.5% and its operating margin to increase from 18.5% to 18.9%.
Full Q4 2021 Results by Transportation Topics
“As you know, we certainly had significant supply chain constraints in the segment, including a number of customer closures that impacted our revenue,” said Craig Arnold, President and CEO. of Eaton, during a conference call with analysts and investors. “However, we believe the worst is behind us here, and we will see an improvement in supply chain related disruptions this year.”
The Dublin-based company noted that today’s diesel engines are more efficient than ever, but significant improvements will be needed to meet 2024 and 2027 emissions regulations.
This will be accompanied by improvements in diesel engine efficiency and more widespread use of electric utility vehicles, according to Eaton, which said it has a portfolio of new technologies enabling vehicle electrification, improving breathing of the engine, bringing more control to valve management, making exhaust gas recirculation more efficient and creating further opportunities to reduce fuel consumption and associated exhaust emissions.
Eaton Cummins Automated Transmission Technologies is a 50/50 joint venture between Eaton and Cummins Inc. The global joint venture produces and markets heavy-duty automated transmissions for commercial vehicles.
During the quarter, sales for its eMobility segment were $88 million, up 4% from $85 million in the fourth quarter of 2020, driven entirely by organic sales growth. The segment, as it did in the third quarter, recorded an operating loss of $8 million, reflecting continued investment in research and development and start-up costs associated with new won programs.
“Like our automotive business, we have experienced significant supply chain constraints and customer closures in this segment,” Arnold said.
He expected the segment to grow 11% to 13% in 2022 and operating margin to fall between 0.8% and 1.2%. “We are well positioned to achieve our long-term goal here, which is to create a new $2-4 billion electric mobility business within Eaton.
The eMobility unit is a new business within Eaton that combines elements of its electric and automotive businesses to provide electric vehicle solutions to OEMs of passenger cars, commercial vehicles and off-road vehicles.
Its largest unit, Electrical Americas, saw revenue soar to $1.9 billion in the fourth quarter from $1.7 billion a year earlier.
For the full year, Eaton reported net income of $2.1 billion, $5.34, on revenue of $19.6 billion. That compares to net income of $1.4 billion, $3.51, for the 2020 period on revenue of $17.8 billion.
Eaton has described its mission as providing sustainable solutions that help customers efficiently manage electrical, hydraulic and mechanical power. It sells products in more than 170 countries.