January 24, 2018 / 12:21 PM / a year ago

Rockwell Automation expects new tax law to spur demand

(Reuters) - Rockwell Automation Inc (ROK.N) posted quarterly revenue slightly shy of estimates, but said sales could get a fillip from the impact of the new tax law on its customers’ investment decisions.

The company posted a better-than-expected fourth-quarter profit on Wednesday, driven by higher demand for its factory automation equipment from the oil and gas industry, and raised its fiscal 2018 adjusted profit forecast to reflect a lower tax rate.

“We saw good growth in heavy industries, partially offset by softness in the Automotive and Consumer verticals. Oil and gas grew double digits,” Chief Executive Blake Moret said on a conference call with analysts.

The Milwaukee, Wisconsin-based company, which in November rejected a sweetened takeover bid from bigger rival Emerson Electric Co (EMR.N), however, noted that it was too early to quantify the benefits of the tax reform.

The company said it was now targeting about $1.2 billion in share buybacks for fiscal 2018, up from a previous estimate of $500 million, adding that it would increase investments this year to “accelerate profitable growth and other long-term objectives”.

Rockwell’s shares fell 1.3 percent in morning trading.

The company reported a loss of $1.84 per share in the first quarter ended Dec. 31, compared with a profit of $1.65 per share a year earlier. The loss was due to charges related to the new U.S. tax code, the company said.

Excluding items, Rockwell earned $1.96 per share, above the average analyst estimate of $1.74 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 6.5 percent to $1.59 billion.

Rockwell raised its fiscal 2018 adjusted profit forecast to $7.60-$7.90 per share from $7.20-$7.50.

Reporting by Sanjana Shivdas and Sayantani Ghosh in Bengaluru; Editing by Maju Samuel and Anil D'Silva

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