Projo Biz Blog

Providence-based Textron Inc. reported this morning its third-quarter profit tumbled 19 percent as the credit crisis eroded its finance business. It also announced plans to liquidate parts of that unit and slash costs companywide.

Net income for the three months ended Sept. 27 fell to $206 million, or 84 cents per share. That compares with $255 million, or $1 per share, posted during the same period last year, when the maker of Cessna jets, Bell helicopters and E-Z-GO golf carts recorded a one-time gain of 5 cents per share related to an insurance settlement. In the 2007 quarter, the company also recorded income of 12 cents per share from discontinued operations.

Quarterly revenue climbed more than 13 percent to $3.53 billion from $3.11 billion last year, helped by stronger results in Textron's aircraft and defense businesses.

Analysts surveyed by Thomson Reuters, on average, predicted earnings of 87 cents per share on revenue of $3.59 billion. Analyst estimates typically exclude one-time items.

Textron also unveiled plans to downsize its commercial finance business, Textron Financial Corp., boost its capital and liquidity positions and accelerate cost-cutting measures throughout the company.

Textron Financial will exit its asset-based lending, structured capital segments and several other product lines through "an orderly liquidation as market conditions allow," the company said.

The finance business also will limit new originations in its distribution finance, golf and resort portfolios, Textron said.

As a result of the downsizing, Textron expects to record a non-cash impairment charge in the fourth quarter of up to $169 million. The company said it will also incur restructuring charges for layoffs and work force consolidation.

"Going forward, we will continue to carefully evaluate the appropriate range of remaining lending activities at (Textron Financial Corp.) in light of strategic fit and continuing developments in the capital markets," said Lewis B. Campbell, Textron's chairman, president and chief executive.

Plans to reduce costs throughout the company are expected to result in restructuring charges totaling about $25 million, mostly occurring in the fourth quarter, according to Textron. Annualized benefits are estimated to be about $40 million, it said.

---