Rockwell Collins profits up 17 percent in 4th quarter

UPDATE: ROCKWELL COLLINS SHARES -$0.37, OR 0.66 PERCENT TO $55.62 AT 2:39 P.M>.)

Rockwell Collins reported earnings up 20 percent and net income up 17 percent in the final quarter of its fiscal year, despite lower sales of defense products.

The defense and aerospace electronics company reported net income of $175 million, up $25 million from the fourth quarter of fiscal 2010. Earnings per share were up 19 cents, or 20 percent, to $1.13.

Chairman and CEO Clay Jones said he was especially pleased by the company's improved operating margins and cash flow generation.

Jones aid he expects strength in commercial markets to bring continued revenue growth in the 2012 fiscal year. He also expects further improvement in cash flow generation and operating margins, and earnings per share growth at more than three times the rate of sales growth.

"Commercial Systems continued to realized strong revenue growth and rapidly expanding operating margins, while Government Systems sustained its robust operating margins in the face of modestly declining sales," Jones said in a statement.

The Commercial Systems business sells avionics and other electronics to airlines, business jet owners, leasing companies and other commercial businesses. Its sales rose 9 percent, or $44 million, to $517 million in the fourth quarter.

Sales to aircraft original equipment manufacturers increased 16 percent, or $37 million, to $268 million. Aftermarket sales grew amore modest 3 percent, or $6 million, to $214 million.

The OEM sales growth was due largely to higher deliveries to the Bombardier Global aircraft platform. Aftermarket sales were driven by higher orders for service and support.

The Government Systems business sales electronics products and services to the United States Department of Defense, defense contracts, state and local governments and other non-commercial customers. Its sales declined 2 percent, or $19 million, to $779 illion in the fourth quarter.

Most of the sales decline came in the areas of navigation products - down 12 percent or $11 million - and communication product sales - down 7 percent or $14 million. The drop in navigation product sales was due mainly to lower deliveries of specialized, highly secure GPS receivers. The decline in communication product sales was due mainly to the completion of the KC-135 GATM program.

Rockwell Collins forecasts 2012 sales will grow to a range of $4.9 billion to $5 billion and earnings per share from continuing operations will grow from $4.40 to $4.60. in fiscal 2012.

The results were in line with analysts' consensus estimates, however shares were down in early trading on the New York Stock Exchange.