UPDATE 3-Rockwell Automation cuts sales forecast on sluggish demand

Wed Apr 24, 2013 10:44am EDT

* Second-quarter adj earnings $1.33/share vs est $1.29

* Revenue $1.52 bln vs est $1.59 bln

* Cuts FY13 revenue forecast to $6.25 bln-$6.45 bln

By Sagarika Jaisinghani

April 24 (Reuters) - Rockwell Automation Inc reported a drop in second-quarter revenue and cut its sales forecast for the full year as the industrial automation company expects global demand to remain sluggish.

Shares of the company, however, rose as much as 3 percent in early Wednesday trading as cost cutting boosted its quarterly profit.

Rockwell said it expects sales of $6.25 billion to $6.45 billion for fiscal 2013 ending Sept. 30, below its prior forecast of $6.35 billion to $6.65 billion.

Sales growth at Rockwell and its peers slowed in 2012 as big industrial customers, particularly those in Europe and China, cut capital spending.

While demand in North America has begun to pick up in 2013, it has not been enough to offset declines in the rest of the world.

"Right now I think we see China as struggling to generate the types of growth that we've seen previously," Chief Executive Keith Nosbusch said on a post-earnings conference call.

U.S. chief executives' confidence in their country's economy rebounded in the first three months of 2013, and about 38 percent plan to boost capital spending in the next six months, according to a survey released last month.

"Whether or not there is a second half recovery remains to be seen," Longbow Research analyst Mark Douglass said. "A lot of industrial companies seem to be talking about that but there's been very little evidence that it is coming."

Rockwell said U.S. sales rose 2.5 percent to $776.9 million in the quarter, but sales in Europe, the Middle East and Africa fell 5 percent to $317.1 million. Revenue from Asia Pacific dropped 19 percent.

Rival Emerson Electric Co also said in March that weakness in European demand had persisted longer than expected, adding that orders for industrial goods remained under pressure.

Milwaukee-based Rockwell, which is looking for ways to cut operating costs, reiterated its profit growth forecast of 5 percent for 2013.

Total second-quarter sales fell 2.5 percent to $1.52 billion.

Net income rose to $175.9 million, or $1.24 per share, from $167.8 million, or $1.16 per share, a year earlier.

Excluding items Rockwell, earned $1.33 per share.

Analysts on average expected earnings of $1.29 per share, excluding items, for the second quarter on revenue of $1.59 billion, according to Thomson Reuters I/B/E/S.

Rockwell shares have gained 11 percent in the past 12 months, but have underperformed the wider S&P 500 index, which gained 15 percent. The company's shares were up 1 percent at $85.89 on Wednesday morning on the New York Stock Exchange.

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