Sequestration and its impacts on the defense industry are here to stay and will dampen defense spending in the near term, according to Rockwell Collins President and CEO Kelly Ortberg.
In announcing financial guidance for fiscal year 2014, Ortberg said he expects "market conditions to be similar to what we experienced this year. “Our assumption is that sequestration is here to stay and, in accordance with the Budget Control Act, 2014 represents the bottom for this defense cycle. We’ve been proactive in planning our business and controlling costs to sustain profitability, while positioning the business to grow as the market recovers.”
The company expects revenue between $4.5 billion and $4.6 billion, and cash flow from operations of $550 million to $650 million.
In commercial markets, the company expects the 787 and A350 aircraft should provide strong revenue growth for our air transport business. Additionally, the company anticipates a slight decline in business jet revenue, as it realizes a full year impact from depressed production rates at the low end of the market. Additionally, announced delays for several new aircraft programs over the past year have negatively impacted the revenue growth profile the originally expected in fiscal 2014.
“Looking out longer-term, I remain confident that our plan will return the company to growth in fiscal 2015 with defense stabilizing, a continued robust air transport market and the benefits of new aircraft entering into service across our commercial markets. Moreover, the pending acquisition of ARINC creates a whole new growth platform for Rockwell Collins, enabling us to capitalize on the fast-growing information management market,” he said.