UPDATE 2-Lower mining spending hits Rockwell Automation

Wed Jul 30, 2014 12:16pm EDT

* 3rd-quarter adj profit, sales miss estimates

* Cuts top end of 2014 profit forecast

* Mining weakness hits sales outside US

* Sales fall in company's largest business

* Shares fall as much as 7 percent (Adds CEO, analyst comment; updates shares)

By Ankit Ajmera and Sagarika Jaisinghani

July 30 (Reuters) - Rockwell Automation Inc, whose automated systems help factories run smoothly, said a decrease in spending by miners globally led to lower quarterly sales outside the United States and in its largest business.

Rockwell's shares fell as much as 7 percent after the company also cut the top end of its full-year earnings forecast and reported lower-than-expected third-quarter profit.

"We don't expect to see a pick up in mining," Chief Executive Keith Nosbusch told Reuters. "We would not expect major projects until late 2015 or later."

Globally coal miners have idled projects and delayed investments due to a supply glut and weak prices, which in turn has hurt demand for Rockwell's products.

The company's systems such as electronic motor starters, signaling devices and condition sensors help increase personnel safety in mines, allow remote control of equipment and increase mineral yield. Such sales contribute in the high single digit percentage to Rockwell's revenue.

"Much of the debate has been whether (Rockwell) is aligned to the "right" end markets for organic growth at this time, and this quarter appears more mixed," Sanford C. Bernstein analyst Steven Winoker wrote in a note.

Milwaukee, Wisconsin-based Rockwell, which gets about half its revenue from outside the United States, said U.S. sanctions against Russia had also hurt business. The country accounts for less than 1 percent of its total revenue.

"Depending upon what happens with sanctions, there is a strong possibility that we won't see much of an uptick (in Russia) as we go forward," Nosbusch said.

WEAK MARGINS

Rockwell narrowed its 2014 adjusted earnings forecast to $6.10-$6.25 per share from $6.00-$6.35. Analysts on average were expecting a profit of $6.20 per share, according to Thomson Reuters I/B/E/S.

The company also narrowed its full-year organic sales growth forecast to 4-6 percent, from 3-6 percent. Its organic sales rose 2 percent in the third quarter ended June 30.

Lower sales and margins in the quarter at Rockwell's control products business - which makes the systems also used in mines, and is the company's largest - weighed on profitability.

Rockwell's revenue from Latin America and Canada fell 7.1 and 14 percent, respectively, in the quarter. Sales from Asia Pacific fell 1.2 percent.

Total revenue rose 1.56 percent to $1.65 billion, helped by higher sales in the United States.

Rockwell's net income fell 2 percent to $199.7 million, or $1.43 per share, also pulled down by a higher effective tax rate. Excluding items, Rockwell earned $1.49 per share.

Analysts had expected earnings of $1.56 per share on revenue $1.68 billion.

Rockwell's shares were down 7 percent at $111.69 in midday trading and were the biggest loser on the Dow Jones U.S. industrial machinery index. (Editing by Savio D'Souza)

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