Rockwell Collins looks to commercial business for growth

Despite potential cuts in defense contracts due to the Congressional sequestration process, Rockwell Collins leadership is confident the avionics and communications company will continue growing overall sales and earnings.

Rockwell Collins is projecting full-year sales of between $4.6 billion and $4.7 billion, with earnings in the range of $4.45 to $4.65 per share.

Kelly Ortberg, president of Rockwell Collins, told shareholders at Thursday's annual meeting that the company expects its commercial systems division, which sells equipment to business and regional aircraft manufacturers and airlines worldwide, to account for 58 percent of overall sales by 2017.

"The company was 60 percent commercial systems when it was spun off of Rockwell International in 2001," Ortberg said. "We moved all the way to 60 percent defense in 2010 and now we're seeing that pendulum swing back.

"Over the past two years, as we've seen declines in our defense market, we're been able to move resources to serve the growth in our commercial market. We've followed a balanced business strategy for more than a dozen years, shifting resources as needed to meet market demand."

Clay Jones, Rockwell Collins chairman and CEO, said international sales increased by 10 percent in 2012. Jones cited Wednesday's announcement of a "teaming" agreement with Tata Power Strategic Engineering Division of Bangalore, India, as an example of the partnerships the company is pursuing to grow sales in Brazil, India, the Middle East and other emerging markets.

"In order to do business around the world, which we're dedicated to doing, we're going to have to have the kind of alliances and partnerships that Tata brings in India," Jones said. "It will help us understand what it's like to do business in that market, how to be a responsible corporate citizen in that country, and ultimately be successful so we can grow our business around the world."

Jones said Rockwell Collins' decision to reduce employment and prepare for the likely impact of potential defense cuts in due to sequestration has proven to be an appropriate strategy.

"In September of last year, we made a decision not to trust our elected leaders to do the responsible thing and get rid of one of the worst pieces of legislation that I've seen in my adult life, and that's sequestration," Jones said. "The reason we did that has been supported in what we've seen in Washington over the last few months.

"There's no more certainty than there was in September, but because we made those early moves, we're more ready for them than we otherwise would have been. We're the only defense company in the country that has presumed that sequestration is going to happen, and right now that's looking like a pretty good bet."