Moog Inc. CEO John Scannell thinks the Elma motion control equipment maker's cost-cutting efforts are paying off in a slow-growth environment.
Moog – one of the region’s biggest employers with about 2,600 workers at its Elma campus –said its profits during the fourth quarter rose by 18 percent, easily topping analyst forecasts, despite a 1 percent drop in sales.
"It was a strong quarter. It was a strong finish to the year," Scannell said Friday. "Almost every business was up," excluding one-time expenses.
"We're faced with a slow-growth environment," Scannell said, prompting Moog to restructure some of its operations, while also continuing to invest in research and development and other long-term projects.
"We're starting out fiscal 2017 with a cautious view of our markets," Scannell said. "We're assuming most markets will be fairly stable, with the only real growth coming from the A350 program," which is a new commercial passenger jet from Airbus.
Moog's profits rose to $33.1 million, or 92 cents per share, from $28.2 million, or 75 cents per share, a year ago. Analysts expected Moog to earn 80 cents per share.
The company's sales fell by 1 percent to $619 million from $623 million, which was less than the $626 million that analysts expected.
Moog said it expects its profits during the current fiscal year to rise by about 1 percent, to $3.50 per share, compared with $3.47 cents per share, during the fiscal year that ended in September. Moog expects its sales to rise by 1 percent to $2.44 billion from $2.42 billion.
"Our projection for 2017 is for moving sideways," Scannell said.
Operating profits from Moog's aircraft controls business, which accounts for 43 percent of the company's sales, strengthened by 10 percent, despite a 4 percent drop in revenues as its commercial aircraft sales improved because of a 44 percent increase in sales to Airbus because of the ramp in production of the A350.
Earnings from its industrial systems business jumped by 67 percent on a 2 percent improvement in sales as revenues from its energy markets improved. Operating profits from its components business rose by 39 percent, despite a 1 percent dip in sales. Earnings from its space and defense controls segment dropped by 55 percent, even though revenues improved by 5 percent.