UPDATE 1-Rockwell Collins posts lower quarterly profit, raises outlook

Tue Jan 21, 2014 1:08pm EST

* U.S. budget deal reduces spending cuts' impact on gov't business

* ARINC purchase also boosts outlook

Jan 21 (Reuters) - Rockwell Collins Inc, which makes electronics systems for aircraft, reported a lower quarterly profit on Tuesday, but raised its full-year outlook, saying government-related sales would not fall as much as previously expected.

Net income in the quarter totaled $131 million, or 96 cents a share, in the fiscal first quarter ended Dec. 31, compared with $132 million, or 94 cents a share, a year earlier. There were fewer outstanding shares in the most recent quarter.

Analysts had expected 94 cents a share, on average, according to Thomson Reuters I/B/E/S.

Total sales rose 1 percent to $1.07 billion, the company said. Commercial system sales rose 3 percent to $521 million, while government-related sales dropped 3 percent to $532 million.

Rockwell Collins said it now expects full-year government system sales to fall in the mid-single-digit percentage range because of the passage of a U.S. budget agreement, the Murray-Ryan Bipartisan Budget Act. The legislation would reduce the effect from U.S. spending cuts under sequestration which the company had previously expected for its defense segment.

Rockwell Collins is also beefing up its exposure to commercial markets as U.S. defense spending shrinks. Commercial revenues stand to grow because of production of newer planes such as the Boeing 787 and Airbus A350.

The company last year bought ARINC Inc, a provider of systems that help airline pilots communicate, and has said that purchase will enable it to bolster information management services for aviation. It has formed a new segment devoted to such services that had $18 million in sales in the just-completed quarter.

Rockwell Collins said it now expects full-year sales of $4.95 billion to $5.05 billion, compared with a prior view of $4.5 billion to $4.6 billion, and profit in the range of $4.35 to $4.55 per share, against an earlier outlook of $4.30 to $4.50 a share.

The company said the brighter view reflected the outlook for government systems and benefits from the ARINC purchase.

Rockwell Collins shares were last up 0.67 percent to $78.10 in early afternoon trading.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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