(Reuters) - Fire safety and security systems maker Tyco International Ltd TYC.N reported a better-than-expected quarterly profit as margins improved, and raised the low end of its full-year forecast due to strong service orders.
Tyco is pursuing commercial security installations in North America that carry recurring service revenue to improve margins.
“We are very focused on how we are growing our installation business, positioning ourselves to be able to accelerate service,” Chief Executive George Oliver said on a post-earnings call.
“Sequentially, the dollar value of installation orders has stabilized and service orders have accelerated,” Chief Financial Officer Arun Nayar said.
Tyco raised the low end of its adjusted profit forecast for 2013 by 5 cents and said it now expects $1.80 to $1.85 per share.
The company, which formed its North American residential security business into a separate company, ADT (ADT.N), and sold its flow control unit to Pentair Ltd (PNR.N) in September, said net income fell to $74 million, or 16 cents per share, for the second quarter from $134 million, or 29 cents per share, a year earlier.
However, excluding $124 million in one-time charges related to the company’s restructuring and an environmental clean-up, Tyco earned 42 cents per share, 3 cents ahead of the average analyst estimate.
The company said the legacy environmental clean-up at a plant in Marinette, Wisconsin accounted for about 76 percent of the charges.
Operating margins, excluding one-time items, rose 1.5 percentage points to 10.2 percent, the company reported.
Revenue rose 3 percent to $2.61 billion in the quarter ended March 29. Revenue at its global products business, which makes fire detection and suppression technologies and access intrusion systems, rose 11 percent to $578 million.
Tyco’s shares, which have gained 6 percent this year, were up 3 percent at $32.70 on the New York Stock Exchange on Friday.
Reporting by Mridhula Raghavan in Bangalore; Editing by Saumyadeb Chakrabarty