Rockwell’s fiscal 1Q02 earnings drop almost 64%; sales down 4%

Milwaukee, Wis. – Rockwell Automation reported Jan. 22 that its first quarter fiscal 2002 earnings plummeted 63.7% to $29 million, or 16 cents per share, in 1Q02 from $80 million, or 44 cents per share, in 1Q01). After the cumulative effect of the SFAS 142 accounting change, the net loss for the first quarter was $6 million (three cents per share). Sales in the first quarter were $938 million, compared to $1,111 million in the first quarter of 2001. First quarter free cash flow was $68 million.

‘Consistent with our expectations, sales declined almost 4% versus our fiscal fourth quarter, and we believe the recently completed quarter represented the low point of business activity for our company in this economic cycle. Since we have yet to see credible and sustained evidence of a recovery, we are assuming second quarter sales essentially equal to the first quarter, with a modest improvement in earnings as the result of our cost reduction actions,’ says Don Davis, Rockwell’s chairman and ceo. ‘We will continue to balance cost vigilance with investments for future growth. Cash flow remains solid, and our strong financial position continues to benefit us in this difficult environment and will provide us leverage as the economy improves.’

Sales of Rockwell’s control systems declined 17.6% to $730 million in fiscal 1Q02 from $886 million in fiscal 1Q01. Sequentially, sales were down 5.6% or $44 million from fiscal 4Q01’s sales of $774 million, primarily due to an 11% decline in shipments in Europe.

Meanwhile, sales in the company’s Global Manufacturing Solutions business were 3% better in fiscal 1Q02 than the year before, and were essentially unchanged from 4Q01. Operating earnings dropped 53% to $67 million in fiscal 1Q02 from $144 million in fiscal 1Q01, but down only 8.2% from $73 million in 4Q01.

In addition, power systems’ sales were down 1.7% to $170 million in fiscal 1Q02 from $173 million in fiscal 1Q01. Operating earnings were up 22% to $11 million in fiscal 1Q02 from $9 million in 1Q01. Sequentially, sales were up 7.6% or $12 million from 4Q01, mostly due to a 19% increase in Rockwell’s mechanical business.

Also, electronic commerce sales increased 11.7% to $38 million in 1Q02 from $34 million in 1Q01. Operating earnings were $2 million in 1Q02, which was an even more substantial gain when compared to an operating loss of $2 million in 1Q01. This increase in operating earnings was caused by higher sales volume, as well as continuing benefits from previously announced cost reductions.

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