Rockwell profits rise 12.7 percent

Strong demand for new aircraft helped Rockwell Collins post a 12.7 percent increase in third-quarter earnings, but sales missed analysts' targets.

The Cedar Rapids-based avionics and communications provider on Friday reported net income of $178 million, or $1.33 per share, for the quarter that ended June 30, compared with $158 million, or $1.15 per share, a year earlier. Total revenue rose 2.3 percent to $1.29 billion third quarter of fiscal 2015 from $1.26 billion in the same quarter last year.

Analysts for Thomson Reuters were expecting a consensus $1.30 per share on revenue of $1.33 billion.

Kelly Ortberg, Rockwell Collins president and CEO, said the company experienced strong third quarter sales of avionics and communications equipment for new aircraft.

'It was a really good quarter for new aircraft equipment, particularly in the air transport market as Boeing and Airbus continue to deliver at high level rates,” Ortberg said.

Commercial Systems sales rose 5 percent to $611 million in the third quarter from $583 million in the same period last year. Aftermarket equipment sales slipped 1 percent primarily due to lower spare equipment purchases by airlines flying the Boeing 787 airliner.

'Airlines are recognizing that they don't need as many spares as first estimated supporting their aircraft,” Ortberg said in a conference call with analysts. 'It's because our products are performing very well in service and are exceeding even our reliability expectations.”

Government Systems sales dipped 1 percent to $530 million in the third quarter of fiscal 2015 from $535 million in the same period last year. Rockwell Collins attributed the lower sales to a variety of factors, including a $12 million reduction due to foreign currency rate changes - primarily the strengthening of the U.S. dollar.

Ortberg said the impact of the strong dollar will continue to be felt.

'I don't think we're going to see a further strengthening of the dollar next year like we've seen this year,” he said. 'I also don't see it reversing going forward.”

Information management services sales rose 4 percent quarter-over-quarter and operating earnings increased 10 percent on the same basis. Ortberg said the business segement is performing as expected.

'We are seeing the market fold out the way we expected with further demand for connectivity to move information on and off aircraft,” he said.

Ortberg said Rockwell Collins has narrowed its full-year earnings forecast to $5.15 to $5.25 per share from $5.10 to $5.30 per share.