Rockwell Automation Inc. executives don’t see factory equipment spending properly picking up until well into 2025 and expect sales in the company's next fiscal year to be roughly flat with the past 12 months.
Milwaukee-based Rockwell booked a net profit of $239 million on sales of $2.04 billion in the three months ended Sept. 30, which was the fourth of Rockwell’s fiscal year. Both profits and sales were down roughly 20% from the same period in 2023, and CEO Blake Moret and his team aren’t forecasting they’ll grow much—if at all—by this time next year.
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The issue continuing to dog Rockwell is that too many of its customer segments—from food-and-beverage producers to automotive manufacturers to semiconductor makers—aren’t committing large amounts of capital to new investments. Many are still putting money to work on expansions or efficiency-focused projects, but those aren't notably moving the dial for Rockwell Automation.
“We’re nearing the end of the drain of excess stock at distributors and machine builders,” Moret told analysts on a Nov. 7 conference call. “Some machine builders and distributors are already back to that equilibrium point, but we’re just not counting on some rapid acceleration for them to put additional inventory back on their shelf.”
Moret and Rockwell’s new CFO, Christian Rothe, have told investors they expect organic sales in the coming 12 months to be somewhere between down 4% and up 2%—the latter coming into view if customer activity turns up more quickly than expected.
Embedded in those assumptions is a nearly 10% drop in orders this quarter—the first of Rockwell’s fiscal 2025—versus late summer followed by a “gradual sequential improvement” from there. The midpoint of full-year revenue guidance is $8.2 billion; Rockwell’s sales in the fiscal year that just ended were $8.26 billion.
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To help maintain Rockwell’s margins, Moret and Rothe are looking for cost cuts and other efficiencies on top of the $110 million Rockwell banked from such initiatives in the past six months—which included cutting 12% of its employees. The company also won’t make any major acquisitions, Moret said, and will instead concentrate on integrating recently-bought businesses.
Shares of Rockwell (Ticker: ROK) rode the post-election market wave 9% higher Nov. 6 but gave up nearly all of those gains after Moret and his team reported earnings the following morning. They closed Nov. 8 trading near $272 per share, in line with where they were six months ago. The company’s market capitalization now stands at nearly $31 billion.
