Rockwell Collins profit flat; CEO to retire
(Reuters) - Aircraft parts supplier Rockwell Collins Inc (COL.N) posted flat quarterly profit on Friday and said Chief Executive Clay Jones would retire in July as part of a succession plan in the works for several years.
Jones will step down as CEO on July 31, when company President Kelly Ortberg will take the job, the company said. Jones will stay on the board as non-executive chairman.
Jones, 64, has been with the company for almost 34 years and became CEO in 2001. He said the board began planning for his departure more than two years ago. As part of the plan, the company promoted Ortberg, 52, to president in September.
The transition comes as Rockwell Collins has reduced its business in some defense segments and cut jobs over a difficult U.S. military spending outlook. Currently, government revenue accounts for 51 percent of Rockwell's sales.
"A lot of the CEOs that have led their companies through the phase of the defense ramp-up are stepping down," said Phil Finnegan, director of corporate analysis at Teal Group.
Other defense company CEOs who have stepped aside in the past year include Lockheed Martin's (LMT.N) Robert Stevens and Jay Johnson of General Dynamics (GD.N).
Jones told a conference call that he was bittersweet about leaving, but felt it was time to retire. The move "allows Kelly to really move into 2014 with the annual operating plan and the guidance in hand that will be his own," Jones said.
In the fiscal second quarter that ended March 31, the company's government sales fell 8 percent to $578 million, contributing to a 3 percent decline in overall sales To $1.13 billion. Sales tied to commercial systems rose 4 percent to $553 million.
"Government systems is going to be under pressure," Finnegan said. He added that Rockwell Collins had produced high profit margins under Jones.
Net income was $161 million, or $1.17 a share, compared with $161 million, or $1.09 a share, a year earlier. There were fewer shares outstanding in the latest quarter.
Rockwell Collins reaffirmed its earlier forecast for full-year profit of $4.45 to $4.65 a share.
Shares of Rockwell Collins closed 2.4 percent higher at $61.10 on Friday.
(Reporting by Karen Jacobs in Atlanta; Editing by Alwyn Scott, John Wallace and Tim Dobbyn)
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