Rockwell’s Sales Record Falls on Lower Heavy Industries Sales

Rockwell Automation’s (ROK) sales in fiscal 4Q16 fell 4.3% to $1.5 billion, led by an organic fall of 4% and a 70-basis-point impact of currency translations. Lower organic sales had an impact on its segment margins, too, which contracted 110 basis points to 19.8%.

The company also incurred restructuring charges of $20 million, around $10 million higher than it had previously expected. The company expects these initiatives to create savings of ~$30 million in fiscal 2017. 

The company’s tax rate was favorable in fiscal 4Q16 due to a favorable mix of global operations and a research and development tax credit that wasn’t present in fiscal 4Q15. In comparison to ROK’s 28% tax rate in fiscal 4Q15, its fiscal 4Q16 tax rate was 28%.

Among Rockwell’s segments, sales in its Architecture & Software segment rose for the first time in over four quarters. Sales in its Control Products & Solutions segment fell 8.8%, whereas sales in its Solutions & Services segment fell 14% in the quarter.

Rockwell Automation’s sales in fiscal 2016 fell 6.8% compared to fiscal 2015 as its organic sales fell 3.9% due to strong falls in the oil, gas, and mining businesses of the heavy industries vertical. Fiscal 2016’s adjusted earnings per share fell 7% compared to the previous year.

Rockwell’s fiscal 2016 earnings fell mainly due to lower sales and a contraction in its operating margin. Its operating margin contracted from 21.6% in fiscal 2015 to 20.2% in fiscal 2016.