April 30 (Reuters) - Illinois Tool Works ( ITW ) raised

its annual profit forecast on Tuesday and beat market estimates

for first-quarter profit, even as revenue dropped 1%.

Elevated loan expenses have constrained business spending,

dulling the impact of steady demand from the automotive industry

for the Illinois-based company's fasteners and other components

used to make vehicles.

"Looking ahead, we expect current levels of demand

across our end markets and favorable year-over-year comparisons

will translate to positive organic growth through the balance of

the year," CEO Christopher O'Herlihy said.

Excluding a $117 million benefit from a one-time accounting

change, its operating margin improved 120 basis points to 25.4%

"as enterprise initiatives contributed 140 basis points", the

company said.

Illinois Tool Works ( ITW ) now expects adjusted profit per share in

the range of $10.30 to $10.70, compared with its previous

forecast of $10 to $10.40.

Its quarterly adjusted profit of $2.44 per share surpassed

analysts' average estimates of $2.36, according to LSEG data.

However, revenue for the quarter fell to $3.97 billion and

missed estimates of $4.03 billion.

(Reporting by Shivansh Tiwary in Bengaluru; Editing by Devika

Syamnath)