United Technologies Corporation (UTX, Financial) has revealed its plans of moving the company's official headquarters to Farmington. The U.S. conglomerate company currently has its headquarters at Hartford. The new headquarters will be around ten miles away from the Gold Building at Hartford. This relocation is being undertaken in a bid to reduce the company's overhead cost. In another statement, the aerospace and building systems manufacturer has announced that they are weighing options for their Sikorsky Aircraft division. There is a high chance of a spinoff of the division which manufacturers Black Hawk and other-purpose helicopters. Due to spinoff news, the company's stocks rose 1.9% at $120.58 in mid-trading afternoon on the NYSE.
Switching location
By the end of 2015, the military contracting company will move its corporate headquarters from Hartford to Farmington, UTC announced. A spokesperson for the company said that the remaining employees of UTC will move ten miles away to Farmington. The main objective of this move is to facilitate the company's overhead cost-cutting plan. This move did not come as a huge surprise to the city's mayor Pedro Segarra. He said that the city is looking to obtain a new tenant for the three floors that the company previously occupied. Although he was far from happy at seeing businesses leave the area, he said the number of companiess coming to Hartford is more than the ones leaving. Though investors are not happy with the decision, he said that he was "confident" new tenants would take up the space. Ken Kennedy, Hartford City's Councilman said that they received the official notification about the relocation on Wednesday. Instead of unnecessarily paying rent, working at the company-owned campus will facilitate their plan in reducing costs, he said.
Potential spinoff
The Sikorsky Aircraft division accounts for a whopping $7.5 billion of the overall sale in 2014. United Technologies reported $65 billion sales for the year 2014. The remaining sales were accounted from the other brands of the company  Otis Elevator, Pratt & Whitney, etc. CEO Gregory Hayes said that the company will decide on the spinoff after analyzing Sikorsky's contribution on providing high-technology systems to UTC. He also said the other contributing factor in the decision is the aircraft's contribution of high-tech systems to the aerospace and building industries. The spinoff of Sikorsky may be difficult due to taxes and high pricing. As of now, no plan of action is drawn and the spinoff is not confirmed as yet. The final decision will be revealed to investors in the annual meeting to be held on Thursday.
United Technologies Corporation, the American MNC deals in the research and manufacture of helicopters, fuel cells, security, aircraft engines and many other industrial products. The company also develops military helicopters, the most famous one being UH-60 Black hawk Helicopter. The company has established its operation all over the world and has currently has 211,000 employees. Founded in 1975, the company will now move its headquarters to its privately owned Farm Springs Road campus in Farmington. The old office- One Financial Plaza will be available for purchase by the end of this month. UTC's senior vice president and CFO Akhil Johri said that the move will ensure a reduction of $100 million cost in corporate office overheads. He just recently on March 11, presented at the Global Industrials & EU Autos Conference. The third quarter EPS 2014 was $2.04, an increase of 32%. Reported sales were $16.2 billion, which included the 5% organic growth. The company expected the 2014 EPS to be anywhere from $6.75 to $6.85.
Conclusion
Investors will have a better picture of the fourth quarter 2014 and full year-2014 financials when the results are made public. As of now, investors can expect better returns owing to the reduction in corporate overhead-cost reduction. Probably, the spinoff decision may materialize giving an impetus to investors returns.
