10-KPeriod: FY2008

EMERSON ELECTRIC CO Annual Report, Year Ended Sep 30, 2008

Filed November 25, 2008For Securities:EMR

Summary

Emerson Electric Co. reported a record fiscal year 2008, demonstrating resilience and growth in a diverse global technology market. The company's strategic segmentation across Process Management, Industrial Automation, Network Power, Climate Technologies, and Appliance and Tools contributed to robust performance. Despite operating in competitive environments and facing potential headwinds from raw material costs and currency fluctuations, Emerson's diversified business model, strong R&D investment, and global manufacturing footprint position it to navigate an uncertain economic outlook for fiscal year 2009. For investors, the company highlights its strong order backlog, which increased to $5.5 billion, indicating solid demand. Emerson also continued its share repurchase program, returning value to shareholders. While the company anticipates a challenging fiscal year 2009 with a projected sales range of $23.5 billion to $25.5 billion and EPS guidance of $2.80 to $3.20, its established market leadership and ongoing investment in innovation provide a foundation for continued performance.

Financial Highlights

50 data points
Beta

Revenue

$23.75B

37.6% Gross Margin

Net Income

$2.41B

10.2% Net Margin

EPS (Diluted)

$3.06

Total Assets

$21.04B

Cash & Equivalents

$1.78B

Free Cash Flow

$2.58B

Financial Statements
Beta
Revenue$23.75B
Cost of Revenue$14.81B
Gross Profit$8.94B
R&D Expenses$458.00M
SG&A Expenses$4.92B
Operating Income$2.45B
Net Income$2.41B
EPS (Basic)$3.09
EPS (Diluted)$3.06
Shares Outstanding (Basic)780.30M
Shares Outstanding (Diluted)789.40M

Key Highlights

  • 1Emerson Electric Co. achieved a record fiscal year 2008, showcasing strong performance across its diversified business segments.
  • 2The company's consolidated order backlog increased to $5.518 billion as of September 30, 2008, up from $4.917 billion in the prior year, indicating robust demand.
  • 3Emerson actively repurchased shares during the fourth quarter of fiscal year 2008, totaling 8.61 million shares, demonstrating a commitment to returning capital to shareholders.
  • 4Research and development expenses increased to $458 million in fiscal year 2008, reflecting a continued investment in innovation and new product development.
  • 5The company generated significant international sales, amounting to $13.479 billion in 2008, underscoring its global reach and diversification.
  • 6Emerson provided a fiscal year 2009 outlook anticipating sales between $23.5 billion and $25.5 billion, with earnings per share projected between $2.80 and $3.20, signaling a cautious but strategic approach to a challenging economic environment.

Frequently Asked Questions

Emerson Electric's strategy for fiscal year 2009 focuses on leveraging its diversified business segments, robust backlog, and global operational presence. Despite anticipating a challenging economic environment, the company plans to manage sales projections within a wide range and provide earnings per share guidance, indicating a proactive approach to adapting to market conditions. Continued investment in R&D and a focus on delivering solutions based on high-quality products at competitive global costs remain core to their strategy.

Emerson manages risks associated with its global operations by maintaining multiple sources of supply for its raw materials, ensuring it is not significantly dependent on any single supplier. For production, a majority of its facilities are located outside the U.S., which exposes them to risks like political unrest or natural disasters, but also allows them to capitalize on market opportunities in emerging economies and maintain cost competitiveness. The company also monitors foreign currency exposures and uses hedging activities to mitigate risks related to currency fluctuations.

The increase in research and development (R&D) spending to $458 million in fiscal year 2008 signifies Emerson's commitment to innovation and maintaining its competitive edge. In highly competitive markets with varying degrees of technological change, R&D is crucial for developing new and improved products and services that meet evolving customer demands and shorten product life cycles. This investment is intended to drive future growth and ensure the company can successfully introduce new solutions to the market.

Emerson Electric returns value to shareholders through a combination of share repurchases and dividend payments. In the fourth quarter of fiscal year 2008 alone, the company repurchased over 8.6 million shares. Additionally, the company has consistently increased its cash dividends per common share, which rose to $1.20 in 2008 from $1.05 in 2007, indicating a sustained effort to reward its investors.