(Reuters) - Illinois Tool Works 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 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)