Moog’s profits slump by more than half
Company officials see growth in next year
Robert T. Brady is hoping the worst is over for Moog Inc.
The Elma motion control equipment maker’s fourth-quarter profits tumbled by more than half as the slumping economy battered its industrial, business jet and medical products markets.
But Brady and other Moog executives are predicting that the company will start growing again next year, banking on a rebound in sales in all of its major markets, fueled partly by the firm’s growing presence in the wind energy business.
Moog’s profits of $15.2 million, or 35 cents per share, were less than half of the $31.7 million, or 73 cents per share, that it earned a year ago. The earnings were slightly less than the 36 cents per share that analysts were expecting.
Sales grew by 3 percent to $504 million during the quarter that ended in early October, up from $491 million a year ago, mainly because of a series of acquisitions Moog has made over the last year.
Moog’s earnings also were hurt by $5 million in restructuring expenses, mainly for the closing of a plant in the Philippines, as well as reductions at facilities in Europe and Salt Lake City, Utah, Brady said.
But Moog also expects business to get steadily better as next year unfolds. The company predicted that profits for the fiscal year that began last month will improve by 14 percent to $103 million, or $2.25 per share, up from $85 million, or $1.98 per share.
Moog, which warned that its earnings guidance could vary by 10 cents per share either way, also forecasts that its sales will rise by 15 percent to $2.12 billion from $1.85 billion.
Brady said he sees signs that Moog’s industrial products business is beginning to stabilize after enduring a 58 percent plunge in sales last year.
“It does seem that some of those businesses have stabilized at this low level” as inventories have been reduced, Brady said. “But you can’t tell whether it’s a trend or not.”
The bright spot in Moog’s business has been its space and defense segment, which was barely affected by the recession. Strong demand for products such as satellite controls and equipment used in tactical missiles led to a 12 percent increase in space and defense sales during the fourth quarter and swelled its operating profits by 60 percent to $9.5 million. It was the only one of Moog’s five operating segments to increase its earnings during the quarter.
Moog’s other businesses struggled with the weak economy. Aircraft control sales were flat, as higher military sales offset a 21 percent drop in commercial aircraft revenues and business jet sales fell by a third. But the segment’s operating profits slid by 16 percent to $11.3 million.
Earnings at Moog’s industrial products unit tumbled by more than half to $7.6 million, while operating profits at its components segment slid by almost a third. Moog’s medical device business lost $763,000, despite a 5 percent increase in sales.
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