(Reuters) - Rockwell Automation Inc (ROK.N) reported a lower-than-expected quarterly profit on increased expenses and a higher tax rate, and the company narrowed its 2012 forecast.
Shares of the producer of systems that make factories run more smoothly were down 2.5 percent at $75.48 in midday trading after falling nearly 6 percent before the market opened.
The company reported higher net expenses and a higher effective tax rate -- 24.9 percent compared with 18.3 percent a year earlier -- chipping away at some of the profit expected by analysts.
Excluding that, operations were still slightly short of expectations, which had gotten too optimistic after an above-forecast first quarter, said Jeff Sprague, an analyst at Vertical Research Partners. Still, “the complexion of the results are decent, with the growth in China and Europe, and U.S. trends were pretty good, so they do seem to be executing pretty well.”
Sales in China in the quarter rose 7 percent, “one of the better China performances we’ve seen this earnings season,” and rose 5 percent in economically unsettled Europe, he added. Sales also increased 5 percent in the United States.
Rockwell Automation said it expected stronger growth in its emerging markets business in the second half of its fiscal year and sequential growth in more mature markets.
“We continue to build our capabilities in emerging markets, and while there may be a slowdown in some of the growth rates, the rates are still higher than in many of the mature economies and markets,” Chief Executive Officer Keith Nosbusch said in an interview Wednesday.
“India was a little more problematic because of high inflation and high interest rates,” he said.
Rockwell generates half of its sales in the United States, 22 percent in emerging markets and 28 percent in other countries, he said.
Rockwell said net income rose to $167.8 million, or $1.16 per share, in the second quarter that ended on March 31, from $166.4 million, or $1.14 per share, a year earlier.
The results missed the analysts’ average forecast of $1.27 per share, according to Thomson Reuters I/B/E/S.
Sales increased 7 percent to $1.56 billion, compared with the analysts’ $1.57 billion estimate.
Milwaukee-based Rockwell said it now expected full-year earnings per share of $5.10 to $5.40, compared with a prior range of $5.05 to $5.45.
The company projected sales of $6.25 billion to $6.45 billion, narrowing the range by $100 million.
Sales and earnings in these ranges would be records, the company said.
Sales in the architecture and software products segment and in the control products and solutions segment increased 7 percent in the quarter.
Reporting by Lynn Adler; Editing by Lisa Von Ahn and Maureen Bavdek