Moog Inc.’s first-quarter profits slipped by 6 percent, and the Elma-based motion control equipment maker trimmed its earnings forecast for this year as weakness in its industrial markets slowed its sales growth, the company said Friday.
“We’re off to a slow start in 2013,” said John Scannell, Moog’s chief executive officer, in a statement.
“The weakness in the major economies around the world is affecting our industrial business,” he said. “On the other had, the aircraft market is strong.”
Moog’s profits fell to $34.1 million, or 75 cents per share, during the quarter that ended in December, compared with $36.4 million, or 80 cents per share, a year ago. The company’s sales rose by 3 percent to $661 million from $601 million.
Earnings in Moog’s industrial products business tumbled by 43 percent, and sales fell by 6 percent as the European and Chinese markets for the company’s wind energy products weakened significantly.
“Industrial remains the big area of focus for the next couple of quarters,” Scannell said in an interview. “The U.S., in the industrial business, has been strong. Asia has kind of stabilized at a lower level, and the weakness we’ve seen this quarter is coming out of Europe.”
That weakness offset strong results from the company’s aircraft controls business, where operating profits jumped by 25 percent, and sales grew by 9 percent on solid gains for both military and commercial aircraft equipment.
As a result, Moog trimmed its profit forecast for the fiscal year that ends in September by a little more than 1 percent, saying it now expects to earn about $162.5 million this year, which still would be up 7 percent from last year but less than the 8 percent increase it predicted in November.
The company also lowered its sales forecast by about 1 percent to $2.62 billion, down from its November guidance of $2.65 billion, although that still would be a 6 percent increase from last year.
“We are still projecting growth in both sales and earnings in 2013, despite the headwinds in our industrial markets,” Scannell said.
Scannell said the ongoing budget uncertainty in the United States, which includes the possibility of deep spending cuts if a long-term deal can’t be reached in the coming weeks to resolve lingering “fiscal cliff” issues, is unlikely to have a major impact on Moog’s sales during the current fiscal year because of the longer lead times associated with its product. But it could impact sales next year, although Scannell said company executives are unsure how sequestration would play out.
“It’s still a wait-and-see game,” he said.
Moog’s space and defense controls business also weakened during the quarter, with earnings sliding by 35 percent as sales dipped by 2 percent to $86.5 million as weaker revenues from launch vehicle equipment and NASA offset improvement in its satellite business.
The company’s components business had a strong quarter, with earnings rising by 25 percent and sales jumping by 13 percent, largely on the strength of its products for the energy and medical markets.
The company’s medical device business remained profitable, with flat earnings and sales during the quarter.