UPDATE 1-Goodrich, Rockwell expect margins to improve

* Companies see improving commercial sector

* Growth emerging in service business

* Goodrich , Rockwell shares up

ATLANTA, May 12 (BestGrowthStock) – Aerospace suppliers Goodrich
Corp (GR.N: ) and Rockwell Collins Inc (COL.N: ) said they expect
profit margins to improve as the air transport sector recovery
gains steam.

Goodrich, a supplier of airplane brakes and landing gear,
told the Macquarie Capital Industrials conference on Wednesday
that recovery in the aerospace aftermarket, or sales tied to
plane servicing and equipment replacement, provide a “good EPS
catalyst” over the next few years.

“We’re starting to see growth emerge in both the
aftermarket as well as total sales levels,” Chief Financial
Officer Scott Kuechle said.

Kuechle said commercial service sales improved in the first
quarter from the fourth quarter, adding that and a stronger
U.S. dollar against the euro and pension expense relief could
also help the company.

“The aftermarket growth will clearly drive margins higher,”
despite pressure expected from the production ramp-up of plane
programs such as Boeing Co’s (BA.N: ) 787, Kuechle said. Margins
on service sales are higher than those on original-equipment
aircraft programs, he added.

Rockwell Collins Chief Financial Officer Patrick Allen told
the conference that his company expects its commercial system
business to grow faster than the government systems business
over the next few years. He said margins at the avionics
supplier could be aided in 2011 as better aircraft demand helps
commercial revenue.

“We’re a pretty highly leveraged business, particularly on
the commercial systems side, so as we generate incremental
revenue it generates substantial incremental margin
opportunities,” Allen said.

Commercial revenue at Goodrich and Rockwell Collins,
suppliers to Boeing (BA.N: ) and Airbus (EAD.PA: ), were hurt in
2009 as weak air travel led carriers to take airplanes out of
service and defer upgrades.

Goodrich shares were up 3.1 percent to $76.52 in afternoon
New York Stock Exchange trading, while Rockwell Collins rose
1.6 percent to $64.79.

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(Reporting by Karen Jacobs; editing by John Wallace)

UPDATE 1-Goodrich, Rockwell expect margins to improve