UPDATE 3-Rockwell Auto tops estimates, ups 2010 forecast

Wed Apr 28, 2010 11:05am EDT

* Q2 shr from cont ops $0.77 vs. $0.52 expected

* Q2 revenue $1.16 bln

* Sees 2010 EPS $2.60 to $2.90

* Shares rise to two-year high (Adds CEO comment, stock reaction)

NEW YORK, April 28 (Reuters) - Rockwell Automation Inc (ROK.N), which makes systems to boost factory efficiency, posted higher-than-expected quarterly profit on Wednesday and raised its full-year profit forecast above Wall Street estimates, and shares rose 2 percent.

Demand was bouncing back from "an unusually depressed" level since plants cut spending so deeply in the middle of 2009, Chief Executive Keith Nosbusch said in an interview.

"Part of the strength we're seeing is just pent-up demand for replacing the normal wear and tear on machines," Nosbusch said, adding that he thought mature economies were still early in their recovery cycle.

Demand from later-cycle, capital-intensive projects, such as those that drive sales of Rockwell's control products, will likely not accelerate for several quarters.

"We'll start seeing that in our second half, but certainly in '11," Nosbusch said.

Rockwell shares rose 89 cents to $62.16 in morning trading on the New York Stock Exchange after rising as high as $63.90. At their highs of the year, shares reached their best level since January 2008.

SALES, EPS BEAT FORECASTS

Net earnings for the second quarter ended March 31 rose to $137 million, or 95 cents per share, compared with $40.6 million, or 29 cents per share, a year earlier.

Earnings from continuing operations were 77 cents per share. Analysts, on average, had expected profit of 52 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 10 percent to $1.16 billion, also beating Wall Street forecasts.

Milwaukee-based Rockwell, whose peers include ABB (ABBN.VX), Emerson Electric Co (EMR.N), National Instruments Corp (NATI.O) and Ametek Inc (AME.N), said an economic recovery is underway, with "meaningful growth in North America and mid-teens growth in emerging Asia."

Rockwell said it expects full-year earnings of $2.60 per share to $2.90 per share, and said full-year revenue should be $4.65 billion to $4.8 billion, higher than the $4.55 billion Wall Street expected. In January, it raised its full-year EPS forecast to a range of $2 to $2.40; analysts have been looking for $2.38.

The new, higher range could be conservative if margins improve significantly in the second half of the fiscal year, said Deutsche Bank analyst Nigel Coe.

"Based on the revenue outlook, it is possible that EPS could ultimately move into the $3-$3.30 range," Coe said in a note to clients.

French rival Schneider Electric SA (SCHN.PA), which competes with Rockwell in some automation markets, last week posted a 19-percent sales increase in its industry unit. [ID:nLDE63K22J]

But Swiss engineering group ABB posted weak orders and its earnings disappointed investors. [ID:nLDE63I1AB] Another European rival, Siemens AG (SIEGn.DE), is set to report results on Thursday. (Reporting by Nick Zieminski; Editing by Derek Caney, Gerald E. McCormick and Robert MacMillan)

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