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UPDATE 3-Rockwell Automation expects first annual sales rise in 3 yrs
November 7, 2016 / 12:33 PM / 10 months ago

UPDATE 3-Rockwell Automation expects first annual sales rise in 3 yrs

* Q4 revenue and profit beat estimates

* Sees FY 2017 sales of $5.94 bln-$6.17 bln vs. est $5.88 bln

* Sees FY 2017 earnings of $5.85-$6.25/shr vs. est $5.98

* Shares up as much as 6 pct (Adds details from CEO interview, conference call, updates shares)

By Ankit Ajmera and Meredith Davis

Nov 7 (Reuters) - Rockwell Automation Inc forecast its first full-year rise in sales in three years as stabilizing demand in industries including oil and gas helped the company report higher-than-expected quarterly profit and revenue.

Shares of the company, which makes factory automation systems, rose as much as 6 percent to $124.75 on Monday.

Rockwell has been hit by weak oil prices that curtailed customer spending in the oil and gas industry, which accounted for about 12 percent of revenue in the year ended Sept. 30, 2015.

Rockwell has been cutting jobs as part of a restructuring plan and estimates gross savings of more than $30 million in fiscal 2017.

The company also forecast adjusted earnings of $5.85-$6.25 per share and a 1-5 percent rise in sales for the year.

Analysts on average were expecting adjusted earnings of $5.98 per share on revenue of $5.88 billion, according to Thomson Reuters I/B/E/S.

Rockwell’s fiscal 2017 sales forecast seemed “aggressive” and has a “risk of negative revisions as the year progresses in a still uncertain environment,” J.P.Morgan analyst Stephen Tusa wrote in a note.

Last week, rival Emerson Electric Co forecast a 1-3 percent drop in underlying sales for the year ending Sept. 30, 2017, citing lower industrial spending.

Rockwell said it could consider acquisitions in fiscal 2017 as it looks to drive sales growth.

“We have a strong pipeline of potential acquisitions in various stages that address one or more of three focus areas around the world,” Chief Executive Blake Moret told Reuters.

Sales in Rockwell’s architecture and software business, which makes computers that help run manufacturing processes, rose 1.8 percent to $696.4 million in the fourth quarter ended Sept. 30.

The business, Rockwell’s second biggest, contributed 44.8 percent to the company’s fiscal 2016 sales.

“We saw positive year-over-year organic growth in the architecture and software segment for the first time this year,” Moret said.

However, sales in the company’s larger control products business - which makes motor starters, signaling devices and relays and timers - fell 8.8 percent to $842.2 million, while contributing about 55 percent of overall revenue.

Rockwell’s net income fell to $185.2 million, or $1.43 per share, from $201.3 million, or $1.50 per share, a year earlier

On an adjusted basis, the company earned $1.52 per share.

Total sales fell 4.3 percent to $1.54 billion.

Analysts had expected fourth-quarter earnings of $1.48 per share and revenue of $1.51 billion.

Up to Friday’s close of $117.56, Rockwell’s stock had risen about 14.6 percent this year, compared with a 6.8 percent increase in the Dow Jones U.S. Industrials index. (Reporting by Ankit Ajmera in Bengaluru; Editing by Shounak Dasgupta, Ted Kerr and Anil D‘Silva)

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