Aerospace firms buoyed by commercial recovery

Monday, 25 April 2011 00:08 - - {{hitsCtrl.values.hits}}

(Reuters) - Aerospace companies Goodrich Corp and Rockwell Collins turned in higher quarterly profits and revenue last week, buoyed by stronger commercial sales as air travel recovers.

L-3 Communications Holdings, a defence contractor that supplies aviation devices such as black boxes for airplanes, lifted its full-year profit forecast but cut its sales outlook, citing pressure in a difficult U.S. defence spending environment.

Rockwell Collins said supplier disruptions caused by the 11 March earthquake and tsunami in Japan as well as U.S. defence budget issues could affect some sales this year.

Chief Executive Clay Jones said while some Rockwell Collins suppliers were not affected by the quake, those with damaged operations were at different stages of resuming work, and still others were operating on reduced schedules because of rolling power outages.

“Impacts we’re seeing are many and varied,” Jones said.

He said the possibility that some programmes might be delayed because of U.S. budget issues could also affect second-half sales. Rockwell also said its government systems revenue would likely not grow in the current quarter.

Revenue at aircraft suppliers suffered in recent years as weak air travel led airlines to take planes out of service and defer upgrades. With air traffic improving, that business has picked up.

Passenger revenue rose at major U.S. airlines including United Continental Holdings Inc. and Southwest Airlines Co. even as higher fuel costs pressured profitability.

“You’re not seeing any negative implications yet from oil on the airlines’ appetite to continue to stick to their maintenance schedules for this year,” said Kenneth Herbert, an analyst with Wedbush Morgan Securities.

Goodrich, a supplier of systems and equipment for commercial and military aircraft, posted net income of $195 million, or $1.52 a share, for the first quarter, topping Wall Street estimate of $1.25 a share, according to Thomson Reuters I/B/E/S.

Goodrich “continues to execute very well and at this point in the cycle seems to be very well positioned for the uptick,” Herbert said.

Rockwell Collins’ earnings of $150 million, or 96 cents a share, for its fiscal second quarter were in line with expectations.

L-3 Communications’ quarterly profit of $204 million, or $1.85 a share, topped estimates of $1.78 a share. But L-3, whose products include explosives-detection devices, lowered its full-year sales view, citing reduced expectations mainly for its government services unit.

Defence contractors are expected to face more cuts in coming years as the U.S. and other governments clamp down on defence spending. U.S. President Barack Obama last week called for shaving $400 billion from U.S. security-related spending starting in fiscal 2013 through the 2023 fiscal year as part of deficit reduction moves.