Eaton Corp. (ETN) predicted that end-market demand for its products will remain weak into early 2010, as the company lowered its sales and earnings outlook for the year.

The company, which manufactures hydraulic and electrical components for the automotive and aerospace industries, posted a first-quarter loss on a 20% drop in quarterly sales. Demand from the struggling truck and automotive sectors was particularly anemic, with Eaton's truck segment sales off 49% in the quarter from a year ago and automotive sales down 50%.

The company predicted that overall end-market sales will decline by 15% to 16% for the year. The company previously forecast an end-market sales decline of 10%.

"It's a major downward adjustment," Chief Executive and Chairman Alexander Cutler said during a conference call with Wall Street analysts. "In the fourth quarter and the first quarter, we've seen an extraordinary deceleration of demand. People are really trying to get at inventory" destocking.

Eaton said it does not expect demand to recover significantly until the first-quarter of 2010. As a result, Eaton now sees operating earnings for 2009 in a range of $2.50 to $3 a share, down from February's projection of $4 to $4.60.

The company forecast second-quarter earnings of about 25 cents a share on revenue of $3 billion to $3.1 billion.

Eaton is the latest diversified manufacturer to lower expectations for the year. Last week, Parker Hannifin Corp. (PH) and Illinois Tool Works Inc. (ITW) also pulled down their guidance amid widespread reductions in sales and income so far this year.

During the first-quarter, Eaton posted a net loss of $52 million, or 30 cents a share, compared with year-earlier net income of $250 million, or $1.64 a share.

Excluding acquisition-related costs, the loss would have been 22 cents. Revenue decreased to $2.81 billion from $3.49 billion a year ago. Analysts had expected the company to loose 25 cents per share on $3.06 billion of revenue.

Gross margin in the quarter slipped to 22.7% from 27.6% amid the sales woes.

Eaton has tried to reduce its exposure to automotive and truck-building customers by supplying components to other industries and overseas customers.

But the global economic downturn has affected all of Eaton's markets.

"It's simultaneous around the world," Cutler said. "The very fast-growing, developing nations have been hit as hard, if not harder, than the developed nations."

Eaton predicted it will get $300 million from business acquisitions this year, compared with $2.1 billion from acquisitions in 2008.

Eaton's stock was recently down 10.2% at $41.18 a share. The stock is down by more than half the past 10 months.

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com

(Kerry E. Grace and Kevin Kingsbury contributed to this report.)