UPDATE 3-Rockwell Automation 2nd-qtr profit misses forecast
Thu Apr 26, 2007 12:58 PM ET
By Scott Malone
BOSTON, April 26 (Reuters) - Diversified manufacturer Rockwell Automation Inc. <ROK.N> reported on Thursday second-quarter profit that missed Wall Street estimates as sales were flat in the United States.
The company, which makes systems that help factories run more smoothly, also cited troubles in the Detroit auto industry and soft Asian growth.
"We had zero growth in North America," said Keith Nosbusch, chairman and chief executive, on a conference call with investors. "But I believe that this is only a pause and the second half of this year will be better."
The Milwaukee-based company reported operating profit of $134.8 million, or 82 cents per share for the quarter ended March 31, excluding gains related to the sale of power systems and one-time charges.
Analysts looked for earnings of 88 cents per share, according to Reuters Estimates. A year earlier, it earned $125.2 million, or 69 cents per share.
Sales in Europe rose 25.6 percent, factoring out a boost due to the dollar's slide against the euro.
"While sales growth was a modest surprise, margins were weak," Stephen Tusa, equity analyst at J.P. Morgan, wrote in a note to clients. "U.S. sales were flat and sales in Asia-Pacific grew a modest 3.5 percent, both disappointments."
Rockwell shares fell 32 cents to $59.61 on the New York Stock Exchange.
BY THE NUMBERS
Including one-time items, profit was $729.3 million, or $4.45 per share, versus $146.5 million, or 81 cents.
Revenue rose to $1.21 billion from $1.12 billion. The prior-year revenue factored out the power-systems unit. Analysts expected revenue of $1.2 billion.
Rockwell expects better results for the second half of the year. Factoring out power systems, the company forecasts second-half profit of $1.96 to $2.06 per share and full-year profit of $3.55 to $3.65 per share.
For the second half, analysts look for earnings of $2 per share, and for the year, $3.60 a share.
Asian sales growth has slowed sharply in recent months, and the company said it has been working to solve management problems in China, where it had expanded rapidly.
"We don't see much improvement (in Asia) this fiscal year, but we'll be building momentum, and we expect the benefits to come during 2008 and continue into the longer term," Nosbusch said in a phone interview.
In January, Rockwell sold its Dodge mechanical and Reliance Electric units, which accounted for about one-fifth of revenue, to Baldor Electric Co. <BEZ.N> in a $1.8 billion deal.
Early this month, James Gelly unexpectedly stepped down as Rockwell chief financial officer. Theodore Crandall has taken on those duties on an interim basis.
Rockwell's main rivals in the automation sector are Mitsubishi Electric Corp. <6503.T> and Siemens AG. <SIEGn.DE>
Rockwell shares are down about 2.4 percent so far this year, compared with a 4.5 percent rise in the Standard & Poor's capital goods index. <.GSPIC>
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