Rockwell Profit Rises 18.2% in 2nd Quarter

By JOHN O’DELL

April 23, 1997 12 AM PT

TIMES STAFF WRITER

SEAL BEACH —

A radically restructured Rockwell International on Tuesday posted a gain of 18.2% in second-quarter profit from its continuing operations, led by strong performances from its automation and aircraft electronics units.

Profit from the company’s four continuing operations rose to $189 million, or 87 cents profit per share, from $160 million a year earlier.

Revenue from continuing operations in the fiscal second quarter ended March 31 increased 4%, to $2.7 billion from $2.6 billion.

Profit growth far outstripped sales gains as the company cut operating costs while increasing profit margins, said Chairman Donald R. Beall.

Industry analysts said Rockwell’s performance for the quarter exceeded expectations, and investors applauded the earnings report by pushing the company’s stock price up $3.25 a share in moderate trading on the New York Stock Exchange. Rockwell common stock closed Tuesday at $65.875, a 5.2% gain.

Rockwell’s Newport Beach-based semiconductor unit’s profit dropped by 13%, however--the result of anticipated costs of developing a new super-fast modem chip.

The company’s automotive parts business also declined in the second quarter, with profit off 12.8% from the 1996 second quarter. Rockwell has announced plans to spin off the Michigan-based automotive unit into a separate, publicly traded company later this year.

Last year, Rockwell sold its defense, aerospace and commercial graphics and printing press businesses as part of a long-term move to eliminate much of its government contracting work and to refocus on commercial electronics. The automotive business is being spun off to complete the company’s transformation.

There are no comparative sales and profit figures in the company’s 1997 financial reports for the units sold last year, and the imbalance resulted in a 12% decline in reported second-quarter net profit--$189 million versus $214 million a year earlier.

The company’ first-half net profit was off 9.3% from $406 million a year earlier--a total that included $94 million from the discontinued operations.

For its continuing operations, Rockwell reported a 17.9% profit increase in the first half, to $368 million, or $1.69 a share, from $312 million, or $1.44 a share. First-half revenue of $5.4 billion from continuing operations was up 8% from $5 billion.

When the automotive unit being spun off this year is subtracted, Beall said, the streamlined Rockwell’s financial performance is “well on the way” to meeting twin goals of a 15% annual increase in earnings per share and annual sales growth of at least 8%.

Separately, defense giant Lockheed Martin Corp.--whose aggressive growth helped push Rockwell out of the defense contracting business--reported a first-quarter profit Tuesday of $290 million, up 6.6% from $272 million a year earlier.

The Bethesda, Md., company said sales rose 31% to 6.7 billion from $5.1 billion a year earlier. Much of the gain came from a near-doubling of Lockheed Martin’s electronics division revenue after the $9.1-billion acquisition last year of most of the businesses of New York-based Loral Corp.

Lockheed Martin’s stock rose 3.3% to $88.50 a share in New York Stock Exchange trading Tuesday, a gain of $2.875 for the day.

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Market Jump

Orange County’s top 10 gainers in Tuesday’s stock market rally:

COMPANY: 1. Rockford Industries, medical equipment finance

% INCREASE: 18.4

LOCATION: Santa Ana

COMPANY: 2. Biopsys Medical, breast cancer diagnosis products

% INCREASE: 14.5

LOCATION: Irvine

COMPANY: 3. PairGain Technology, telecommunications

% INCREASE: 11.9