Diversified manufacturer Tyco International Tuesday posted first-quarter revenue growth of 8 percent, led by strength in the conglomerate's electronics business.The company added that it is seeing some slowing in certain parts of the electronics market, a slowdown it believes will reverse itself later this year.
Tyco said its quarterly revenue increased to $10.3 billion, while net income expanded to $793 million, or 39 cents per share, from $556 million, or 27 cents, in the year-earlier period.
In the fourth quarter of 2006, Tyco announced a $600 million company-wide restructuring program, from which the company expects to incur about $500 million in charges during fiscal 2007.
Tyco said last year that it will separate into three publicly traded companies - Tyco Electronics and Tyco Healthcare, along with Tyco International. In the first quarter, charges related to that restructuring totaled $83 million, including $9 million in Electronics, $37 million at Fire & Security, $16 million at Healthcare, $7 million in Engineered Products & Services and $14 million at corporate.
“This was a quarter of good top-line growth and solid operational progress," said Tyco's Chairman and Chief Executive Officer, Ed Breen. "We are pleased to have submitted our separation-related filings to the U.S. Securities and Exchange Commission and we expect the separation to occur early in the second calendar quarter of this year.”
Within the company's Electronics segment, organic revenue growth came in at 6 percent, with growth in the automotive, industrial machinery, power utility, medical and appliance markets partially offset by lower growth in the computer market and a revenue decline in the communication service provider market. Growth in North America lagged Europe and Asia.
Organic revenue growth in the company's Fire & Security unit was 4 percent, led by an 8 percent increase in Worldwide Fire. Safety Products grew 4 percent and Worldwide Security grew 3 percent.
Healthcare revenue growth in the quarter was 5 percent, boosted by a strong performance in Medical Devices, Pharmaceuticals and Imaging, partially offset by a revenue decline in Retail. Revenue growth was also stronger in international markets, with solid growth in Europe, Asia Pacific and Latin America.
The company's Engineered Products & Services division saw revenue growth of 4 percent, with double-digit growth in Flow Control and Fire & Building Products, partially offset by flat revenue in Electrical & Metal Products and a $40 million revenue decline in Infrastructure Services.
“We feel good about our first quarter operational performance and the global economic environment overall," Breen said. "After a period of strong growth, we are seeing some slowing in certain electronics markets, in particular the computer and communication infrastructure equipment markets, which we believe will strengthen as we move further into the year. In addition, we expect metals spreads in Engineered Products & Services to continue to be weaker than last year in the second quarter, with improvement in the second half of the year.”
Tyco expects revenue growth of 6 to 7 percent (organic growth of 3.5 to 4.5 percent) in the second quarter.