Eaton Q2 Profit Inches Lower as Costs Outpace Revenue Bump
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Eaton Corp. saw second-quarter profit fall amid robust spending for the company’s buildout of data centers and associated power generation, even as it set a quarterly record for revenue, .
Dublin-based Eaton posted a profit of $982 million in Q2, a decrease of 1.2% compared with $994 million in the same period 12 months earlier. However, Eaton’s sales in the quarter brought home $7.03 billion in revenue, a quarterly record and up 11% from $6.35 billion in the second quarter of 2024. In addition, Eaton beat consensus analyst expectations for Q2 revenues by 1.45%, according to Zacks Equity Research.
However, Eaton’s cost of products sold in the most recent quarter jumped 12.5% to $4.43 billion from $3.94 billion in the year-ago period. Plus, a decrease in earnings at the component manufacturer’s Vehicles division — which manufactures clutches, brakes, transmission systems and more for trucks — also dragged on the company’s bottom line, it said Aug. 5.
Supply chain turmoil and an increase in tariffs globally are bolstering the costs of all industrial manufacturers — particularly those using aluminum, steel and copper, it noted.
The company was also busy on the deal market. Eaton acquired pre-integrated modular power enclosure designer and builder on April 1 for $1.45 billion. And on June 16, it inked an agreement to buy U.K.-based aerospace controls, sensors and stores ejection system manufacturer for $1.55 billion.
This activity lifted its merger & acquisition costs for the quarter to $54 million, much steeper than the $8 million it spent on M&A in the year-ago quarter.
The ongoing boom in construction of data centers and the power they need to meet cloud computing and artificial intelligence requirements saw sales at Eaton’s Electrical Americas segment hit a record $3.35 billion, up 16% from $2.88 billion in the year-ago period. The company’s Electrical Global segment also posted a quarterly sales record of $1.8 billion, up 9% year over year from $1.61 billion.
Aerospace segment sales, meanwhile, were a record $1.08 billion, up 13% compared with $955 million in the year-ago period.
However, Eaton’s Vehicle unit posted sales of $663 million, a decrease of 8% from $723 million a year earlier, and the company’s eMobility division saw sales slip 4% to $182 million in Q2 from $189 million in Q2 2024.
“We are confident in our strategy and remain well-positioned to capitalize on megatrends including digitalization, electrification, reindustrialization and increased defense spending,” CEO Paulo Ruiz said in a statement accompanying the results.
Ruiz during Eaton’s Aug. 5 quarterly conference call added, “Broadly speaking, if I think about the portfolio, I hope you agree that we made strong progress in a short period of time. We demonstrated strong commitment and resolve to execute on our portfolio strategy. We’ll continue to double down, investing in high-growth and high-margin businesses.”
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