Rockwell Automation sees positive outlook while dealing with tariff costs

Company to neutralize $90 million in added costs with supply chain, pricing actions

Rockwell Automation’s Blake Moret sees continued opportunity for a good year of growth in 2019, even as his company deals with $90 million in additional costs from tariffs.

Rockwell Automation

Rockwell Automation’s Milwaukee headquarters.

“While global trade tensions create uncertainty, we have not seen an impact on customer demand as industrial companies continue to focus on productivity,” said Moret, Rockwell chairman and chief executive officer.

He said the macroeconomic environment remains favorable and pointed to a positive Purchasing Managers Index metric and growth in industrial production as positive signs. He highlighted heavy industries and consumer markets as two areas with particularly strong growth potential.

Rockwell, which started its 2019 fiscal year in October, projected it would see 3.7 to 6.7 percent organic growth this year. The guidance includes a flat automotive market, which leaves the possibility of some upside, Moret said. It also comes after a year when Rockwell saw a 5.5 percent organic increase in sales and a 20 percent increase in adjusted earnings per share.

In addition to guidance, Rockwell also revealed it anticipates a gross impact of $90 million from tariffs imposed on China along with retaliatory actions taken by the Chinese. Patrick Goris, Rockwell chief financial officer, said the company will be able to neutralize those costs so there is no impact on financial performance in 2019.

About half or Rockwell’s mitigation actions will come from supply chain changes and negotiations with vendors, Goris said. The other half will come from selective pricing actions.

“To be sure, the uncertainty doesn’t help things, but we focus on what we can control and when the tariffs become tangible we deal with mitigating them,” Moret said.

He added that Rockwell has not seen the tariffs impact orders from customers, giving a boost to the company’s positive outlook.

“Manufacturers and other industrial companies are looking for productivity when times are good (and) when times are bad, so we’re really happy with the proposition there,” he said.

Rockwell Automation’s Blake Moret sees continued opportunity for a good year of growth in 2019, even as his company deals with $90 million in additional costs from tariffs.

Rockwell Automation

Rockwell Automation’s Milwaukee headquarters.

“While global trade tensions create uncertainty, we have not seen an impact on customer demand as industrial companies continue to focus on productivity,” said Moret, Rockwell chairman and chief executive officer.

He said the macroeconomic environment remains favorable and pointed to a positive Purchasing Managers Index metric and growth in industrial production as positive signs. He highlighted heavy industries and consumer markets as two areas with particularly strong growth potential.

Rockwell, which started its 2019 fiscal year in October, projected it would see 3.7 to 6.7 percent organic growth this year. The guidance includes a flat automotive market, which leaves the possibility of some upside, Moret said. It also comes after a year when Rockwell saw a 5.5 percent organic increase in sales and a 20 percent increase in adjusted earnings per share.

In addition to guidance, Rockwell also revealed it anticipates a gross impact of $90 million from tariffs imposed on China along with retaliatory actions taken by the Chinese. Patrick Goris, Rockwell chief financial officer, said the company will be able to neutralize those costs so there is no impact on financial performance in 2019.

About half or Rockwell’s mitigation actions will come from supply chain changes and negotiations with vendors, Goris said. The other half will come from selective pricing actions.

“To be sure, the uncertainty doesn’t help things, but we focus on what we can control and when the tariffs become tangible we deal with mitigating them,” Moret said.

He added that Rockwell has not seen the tariffs impact orders from customers, giving a boost to the company’s positive outlook.

“Manufacturers and other industrial companies are looking for productivity when times are good (and) when times are bad, so we’re really happy with the proposition there,” he said.

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