Milwaukee-based Rockwell Automation reported first quarter net income of $185.5 million, or $1.40 per share, down 15.5 percent from $214.2 million or $1.56 per share during the first quarter of the previous fiscal year.
The company also saw revenue fall 9.4 percent to $1.43 billion in its first quarter of fiscal 2016.
The company attributed the decline in revenue and profits to the strong U.S. dollar and weakness in the oil and gas industry.
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Rockwell Automation's Milwaukee headquarters.[/caption]
The revenue numbers were down 3.3 percent organically and 6.1 percent because of currency conversion. Chairman and chief executive officer Keith Nosbusch said heavy industry end markets, particularly oil and gas in the United States, continued to soften and the weak start to the fiscal year was expected.
The company also lowered its guidance for the full fiscal year guidance for sales after having offered it in November. The company now expects revenue to be $5.9 billion instead of $6 billion, with organic sales down between 1 and 5 percent.
Chief financial officer Ted Crandall said the company has taken some steps to control costs, but added that lowering the sales expectations shouldn't be seen as a sign of something bigger.
"We are not calling this the beginning of a recession. We expect business levels to remain relatively stable," he said. "Given the uncertainty right now, it wouldn't be prudent not to have contingency plans, and we'll go there if we need to, but we don't think that's necessary at this time."
Nosbusch said the industrial economy is "definitely weakened," but consumers are still spending.
"Right now, the expectation is we will not see a recession," he said. "When we look to the macroeconomic indicators, it's not pointing to that."
Nosbusch added that the company sees opportunities to come out of the weaker economy even stronger.
"We have a proven track record of navigating through challenging market conditions, balancing short-term financial performance with our long-term priorities. We will protect our key investments in innovation, domain expertise and commercial resources, and will continue to expand our served market and gain share,” Nosbusch said.
The company saw revenue in its architecture and software segment decrease 9.2 percent to $642.9 million. The control products and solutions segment of the business was down 9.6 percent to $783.7 million.
Revenue declines were led by the Asia Pacific region where they were down 10.8 percent to $173 million. Revenue from Canada was down 7.9 percent to $79 million and from the U.S. it was down 5.9 percent to $787 million.
Revenue from Latin America was up 7.6 percent to $114 million and in Europe, the Middle East and Asia was up 5.8 percent to $274 million.
Nosbusch said he was pleased with the performance in Latin America, particularly Mexico, and said he still believes China will be an important source of growth for the company.
He said he had just returned from China and he was encouraged by the strategy the country has on manufacturing, noting there is a 30-year vision for improving competitiveness as costs increase, adding this was particularly true in the auto industry.
"We still see the need to automate to take costs out of their operations," he said.