Reuters New Zealand
Rockwell Automation profit falls, cuts forecast
Wednesday July 23, 01:03 AM
(Adds revenue, details, quote, byline)
By Scott Malone
BOSTON, July 22 (Reuters) - Rockwell Automation Inc ROK.N said on Tuesday third-quarter profit fell 7.1 percent and it cut its earnings forecast, citing weakening demand in the United States and Europe for its products, which help factories run more smoothly.
The Milwaukee-based company expects full-year profit per share to come to $4.00 to $4.10. Last month it warned investors that demand for its high-margin software products was deteriorating and that it no longer expected to hit its target of $4.25 to $4.45.
Analysts, on average, were looking for full-year earnings of $4.01 per share, according to Reuters Estimates.
"We are operating in a bifurcated world economy where buoyant growth in emerging markets coincides with sluggish growth in developed economies," said Keith Nosbusch, Rockwell's chairman and chief executive, on a conference call with investors.
"We continue to experience strong growth in Asia-Pacific and Latin America," he added. "Unfortunately, the macroeconomic conditions are weakening in our two largest markets, Europe and North America."
Profit for the fiscal third quarter ended June 30 came to $152.6 million, or $1.03 per diluted share. For the year-earlier period, it had reported earnings of $164.2 million, or $1.05 per diluted share.
Analysts, on average, had looked for third-quarter profit of 97 cents per share.
"The mere fact that the company beat the lowered number provided only a month ago highlights the lack of visibility here," wrote J.P. Morgan analyst Stephen Tusa, in a note to clients. "Things have not fallen off a cliff, but visibility on the outlook remains limited with the potential for future end market deterioration."
Rockwell's higher-margin software business has been more volatile in recent months, while its automation equipment unit is more dependent on long-term contracts.
Revenue came to $1.48 billion, up 15.1 percent from $1.28 billion. The company noted that 5 percentage points of its sales growth was related to favorable currency conversions and 4 points from acquisitions.
The company's Asian and Latin American operations were key boosts in the quarter.
Rockwell shares are down about 37 percent so far this year, a much steeper drop than the roughly 18 percent slide of the Standard & Poor's capital goods index .GSPIC.
Its sinking share price has led some investors to speculate that Rockwell could become a takeover target, though company executives have denied any interest in selling.
Rockwell's main rivals include Japan's Mitsubishi Electric Corp 6503.T and Germany's Siemens AG SIEGn.DE. (Editing by Gerald E. McCormick and Derek Caney)
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