EARNINGS : TRW, Rockwell See Their 1st-Quarter Profits Take Off

TRW Inc. and Rockwell International Corp. posted sharply higher profits for the first quarter on Monday despite earnings weakness at their aerospace and defense groups.

The results underscore how the two diversified companies increasingly rely on their commercial goods to generate growth as their aerospace lines continue to grapple with slumping U.S. spending on space and defense.

For instance, Rockwell now garners nearly three-quarters of its sales from commercial and international markets, Chairman Donald R. Beall said in a telephone interview.

The earnings gains delighted Wall Street. TRW’s stock soared $4.125 a share to $72.25, and Rockwell’s climbed $1.875 a share to $41.875, both in New York Stock Exchange trading.

Surging sales of TRW’s automotive components lifted the Cleveland-based company’s profit 79%, to a quarterly record $115 million, or $1.72 a share, from $64.1 million, or 97 cents a share, a year earlier. TRW’s sales climbed 20%, to $2.60 billion from $2.16 billion.

The improvement reflects strong sales of TRW’s air-bag and seat-belt restraints and auto-steering systems, which benefited from robust auto sales in the United States and Europe and auto makers’ increasing use of more than one air bag per vehicle.

But operating profit at TRW’s space group--a Redondo Beach-based builder of satellites and other space gear--dipped to $45.3 million from $46.2 million, while sales edged up 4%, to $705.8 million from $680.7 million.

Nonetheless, the space division is “extremely healthy,” TRW Chairman Joseph T. Gorman said in an interview. Its sales are growing after a prolonged slide, and the cash generated by TRW’s auto parts business is enabling TRW to consider potential acquisitions to expand the space division, he said.

“I’m not predicting that, but we’re allowing ourselves to look,” Gorman said.

Seal Beach-based Rockwell said its net income for the second fiscal quarter climbed 24% to $191.4 million, or 88 cents a share, from $154.7 million, or 70 cents a share, a year earlier. Its sales rose 21%, to $3.36 billion from $2.76 billion.

Rockwell’s industrial-automation equipment (aided by its recent purchase of Reliance Electric Co.), automotive components and graphics systems paced the gains.

Operating profit at its avionics, telecommunications and defense-electronics division fell 11%. Rockwell’s aerospace group had a 9% drop in operating profit.

Beall said that “the real drivers” of Rockwell’s growth are its automotive, automation, avionics and telecommunications lines. But he said its venerable aerospace operations remain “sizable businesses” that generate “excellent cash flow and technology that we use elsewhere” in the company.