Rockwell Automation
July 18, 2011 – 7:04 pm
Business Profile
Rockwell Automation provides industrial automation power, information and control products and services. The Company was established in 1996 in Delaware as a part of tax-free re-organization of the former Rockwell International Corporation, pursuant to which the Company divested its aerospace and defense businesses to The Boeing Company. Rockwell International Corporation was established in 1928.
Subsequently, in June 2001, the Company divested its Rockwell Collins avionics and communications business into a separately traded, publicly held Rockwell Collins, Inc. In September 2004, The Company also sold its FirstPoint Contact business. Further, the Company also announced entering agreement with Baldor Electric Company to sell Dodge mechanical and Reliance Electric motors and motor repair services businesses in November 2006. In September 2006, the Company sold its stake in Rockwell Scientific Company.
Rockwell Automation’s primarily geographic market includes the United States as well as Canada, Mexico, Brazil, the United Kingdom, Germany, Italy, China, Korea and Australia. United States accounts for approximately 62% of the Company’s total net sales. The Company serves clients in a broad range of industries including transportation, consumer products, basic materials, and oil & gas.
The Company’s common stock is registered and listed on the New York Stock Exchange under the ticker “ROK”.
The Company de-listed its common stock from the London Stock Exchange and the Pacific Exchange in 2006.
The Company is strongly focusing on its globalization efforts and increasing the cost productivity level in 2007 and beyond. The Company plans to achieve its cost productivity targets through facility rationalization and workforce eliminations.
The Company has organized itself into two operating businesses: Power Systems and Control Systems.
Financial Performance: The Company’s worldwide net sales increased 11% to $5,561 million in 2006 from $5,003 million in 2005 with double digit growth at both Power Systems and Control Systems. Net sales in the North America increased 11% in 2006 as compared to 2005, benefiting primarily from the growth in power-centric businesses, partly offset by weakness in the automotive market of North America. Net sales in the Asia-Pacific sector increased 11% in 2006 led by strong growth in India and China. Net sales in Latin America grew 19% primarily owing to strong demand from the mining and oil and gas sectors. European sales grew 7% in 2006 over 2005. Control Systems’ sales contributed $4,551 million to the Company’s total net sales, up 10.3% from $4,123 million in 2005. Power Systems’ accounted for $1,010 million of net sales, up 15% from $880 million in 2005.
Rockwell Automation’s operating earnings increased 19.4% to $1,035 million in 2006 from $867.2 million in 2005 primarily owing to higher volumes, productivity gains and favorable environment for pricing, partly offset by higher spending on growth initiatives and higher inflation. The Company’s operating margin improved to 18.6% in 2006 from 17.3% in 2005. The Company’s net income increased 12.4% to $607 million in 2006 from $540 million in 2005.
Management of the Company anticipates a tough operating environment in the near term owing to continued competitive pressures and increasing energy and raw material costs and slowing US and Canadian economies. The Company, however, expects sustained growth momentum in the market other than North America.
The Company expects 7-8% increase in its net sales in 2007 over 2006 and diluted earnings per share in $3.70 – $3.90 range.
Control Systems: The segment is the Company’s largest operating business segment and generated net sales of $4.6 billion in 2006. This represented 82% of the Company’s total net sales. The segment employed nearly 19,000 people as of September, 2006. The segment offers industrial automation systems, software, systems and services. Control Systems includes two business units: the Automation Control and Information Group (ACIG) and the Components and Packaged Applications Group (CPAG).
CPAG provides motor starters, push buttons, contactors, signaling devices, termination and protection devices, timers and relays, condition sensors, motor control centers, adjustable speed drives, drive systems, and engineered and packaged systems and products. CPAG’s net sales accounted for nearly 39% of the segment’s net sales. The Company’s major competitors in this business include ABB, Schneider Electric and Siemens.
ACIG’s major products monitor and control industrial processes and plants. These include controllers, control platform, sensors, industrial computers, machine safety components, processor, input/output devices and software. ACIG’s net sales accounted for nearly 45% of the segment’s net sales. The Company’s major competitors in this business include Emerson Electric Co., Mitsubishi Corp., Omron Corp., Schneider Electric SA and Siemens AG.
Headquarters of the segment is located in Milwaukee and it has presence in North America; Asia-Pacific; Europe, Middle East and Africa; and Latin America. The segment’s operation in US generated 57% of the total segment’s net sales in 2006.
Power Systems: The segment generated net sales of $1.0 billion in 2006. This represented 18% of the Company’s total net sales. The segment employed nearly 4,000 employees as of September, 2006. The segment operates through two separate business units: Mechanical (Dodge mechanical) and Electrical (Reliance electrical).
Major product of Mechanical business unit includes Gear reducers, Mounted bearings, Mechanical drives, Couplings, Conveyor pulleys, Clutches, Motor brakes and Bushings. The Company’s major competitors in this business include Altra Industrial Motion, Inc., Emerson Electric Co., Martin Sprocket and Gear, Inc., Regal-Beloit Corporation and Rexnord Corporation.
Major products in Electrical business unit include engineered and industrial motors, repair services and consulting services. The Company’s major competitors in this business include A.O. Smith Corporation, Baldor Electric Company, Emerson Electric Co., General Electric Co. and Regal-Beloit Corporation.