(Reuters) - Aircraft parts supplier Rockwell Collins Inc said it will take a “hard look” at its key government portfolio as poor performance in the segment dragged sales and forced the company to cut its full-year sales outlook.
Rockwell has felt the sting of tighter times over the past year as several of its defense programs were canceled due to U.S. budget cuts.
Sales to government agencies, which contribute 54 percent to Rockwell’s revenue, have fallen for four straight quarters. And the company expects it to fall in the low single digit percentage for the rest of 2012.
“This is a time where we are taking a hard look at the whole business,” Chief Executive Clay Jones said in reply to an analyst’s question on whether the company would consider selling off any business within the government segment.
Rockwell would look to have a leaner portfolio by the time the business stabilizes, he added.
The company may devote more resources to the airborne avionics part of the business, instead of surface solutions and navigation systems, KeyBanc Capital Markets analyst Michael Ciarmoli told Reuters.
Rockwell, which discontinued new investment in public safety vehicle systems, will evaluate options for its surface solutions business that makes products for soldiers and military vehicles, the analyst added.
The supplier of avionics and other electronic systems for commercial and military planes now expects 2012 sales of about $4.85 billion, down from its earlier forecast of $4.9 billion to $5 billion.
Its commercial segment, which is benefiting from a pickup in airplane production and solid air transport trends, is expected to grow 10 percent in the second half.
Rockwell maintained its profit forecast of $4.40 to $4.60 per share from continuing operations, but analyst Ciarmoli said the company may find it difficult to hit the high end of that range.
Rockwell also cited lower deliveries to Hawker Beechcraft, one of its biggest business jet customers, as a reason for the cut in its revenue forecast.
Reuters reported last month that Hawker was preparing to file for bankruptcy protection.
Rockwell has outstanding receivables of about $30 million from Hawker, CEO Jones said on the call.
Shares of the Cedar Rapids, Iowa-based company were trading down 4 percent at $56.51 on Thursday on the New York Stock Exchange.
Reporting by A. Ananthalakshmi in Bangalore; Editing by Supriya Kurane, Roshni Menon