* Second-quarter revenue $1.60 bln vs est. $1.61 bln
* Adjusted earnings $1.35/share vs est. $1.44
* Keeps 2014 revenue, earnings forecast
* Shares fall as much as 7 pct (Adds CFO, analyst comments; updates shares)
By Sagarika Jaisinghani
April 29 (Reuters) - Rockwell Automation Inc, which makes systems that help factories run smoothly, reported a lower-than-expected quarterly profit as higher costs and a strong dollar hurt margins.
The company’s shares fell as much as 7 percent on Tuesday.
Rockwell said in January that it would ramp up spending on product development this year and that costs would grow faster than sales.
The company also spent more on employee variable pay in the second quarter ended March 31, Chief Financial Officer Theodore Crandall told Reuters on Tuesday.
Margins at the company’s control products business, which makes motor starters, push buttons and condition sensors, fell to 12.2 percent in the quarter from 13 percent a year earlier.
The business accounts for more than half of Rockwell’s total revenue.
“We already knew about the increased spending and variable compensation expense, so it seems like the culprit might be (foreign exchange) hit in (Rockwell‘s) control products and solutions business,” Nomura Equity Research analyst Shannon O‘Callaghan wrote in a note.
The control products business has significant exposure to countries such as Brazil, Argentina, and Canada, Rockwell said.
Currencies of these countries weakened against the U.S. dollar in the first three months of the year.
Rockwell maintained its adjusted earnings forecast of $6.00-$6.35 per share and revenue of $6.6 billion for 2014.
Analysts on average were expecting a profit of $6.27 per share on revenue of $6.69 billion, according to Thomson Reuters I/B/E/S.
Rockwell’s net income rose to $180.3 million, or $1.28 per share, in the second quarter from $175.9 million, or $1.24 per share, a year earlier.
Excluding items, Rockwell earned $1.35 per share.
Revenue rose 5 percent to $1.60 billion.
Analysts had expected earnings of $1.44 per share on revenue of $1.61 billion.
Rockwell’s shares were down 6 percent at $117.12 on Tuesday afternoon on the New York Stock Exchange.
The stock had gained about 47 percent in the year to Monday’s close, compared with a 17 percent rise in the S&P 500 index. (Editing by Joyjeet Das and Kirti Pandey)