Rockwell Auto profit beats Street, raises outlook
Wed Jul 25, 2007 10:44AM EDT
By Scott Malone
BOSTON (Reuters) - Manufacturer Rockwell Automation Inc. (ROK.N: Quote, Profile, Research) reported on Wednesday that quarterly profit rose, topping Wall Street's expectations, helped by strong foreign demand for its industrial control systems.
Strong growth and improved margins at its architecture and software unit, which provides systems to help factories run more smoothly, drove the increase, sending shares up as much as 6 percent.
Rockwell reported profit of $164.2 million, or $1.05 per share, compared with $149 million, or 83 cents per share, a year earlier.
Profit from continuing operations came to $1.07 per share. Analysts, on average, expected profit of 96 cents per share, according to Reuters Estimates.
"The beat came from much improved operating leverage, specifically in the Architecture & Software segment," wrote Deutsche Bank analyst Nigel Coe, in a note to clients.
Sales came to $1.28 billion, up 9.3 percent from $1.17 billion a year earlier. Rockwell said a 13 percent rise in international sales, factoring out the effect of currency adjustments, helped drive the growth.
Rockwell said results in Asia improved after several quarters of operational difficulties and a management reshuffling. Asia-Pacific sales were up 9 percent when the effect of exchange-rate fluctuations are factored out.
DOMESTIC SALES PICK UP
Sales to the United States, the company's largest market, were up 2 percent, after having been flat earlier in the year.
"The rest of the world just remained strong but the U.S. picked up," said Chairman and Chief Executive Keith Nosbusch in a phone interview. "We also had a very strong productivity (improvement) quarter and that combination of growth and productivity is what created the outcome that we reported today."
The Milwaukee-based company expects to report full-year profit of $3.65 to $3.70 per share, higher than its previous outlook of $3.55 to $3.65 per share. Analysts, on average, had expected full-year profit of $3.59 per share, according to Reuters Estimates.
Rockwell expects 10 percent revenue growth this year, up from its previous growth estimate of 8 percent to 9 percent.
The company this month bought UK-based ICS Triplex, a maker of control and safety equipment, in a $221 million deal. The addition of that business was part of the reason for the raised sales and profit forecast.
In January, Rockwell sold its Dodge mechanical and Reliance Electric units, which had accounted for one-fifth of its revenue.
Rockwell's main rivals are Mitsubishi Electric Corp. (6503.T: Quote, Profile, Research) and Siemens AG (SIEGn.DE: Quote, Profile, Research).
Rockwell shares were up $3.08 to $73.69 on the New York Stock Exchange. They have risen about 21 percent so far this year, but are below their 52-week high of $75.60 hit last week.
By way of comparison, the Standard & Poor's capital goods industry index (.GSPIC: Quote, Profile, Research) is up about 17 percent this year.
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