10-KPeriod: FY2009

EMERSON ELECTRIC CO Annual Report, Year Ended Sep 30, 2009

Filed November 23, 2009For Securities:EMR

Summary

Emerson Electric Co. reported its fiscal year 2009 results, a period marked by a challenging economic environment. Despite a decline in net sales to $20.9 billion from $24.8 billion in 2008, the company demonstrated resilience. Looking ahead to fiscal year 2010, Emerson projected a further decline in underlying sales but anticipated reported sales to be flat to slightly down, reflecting expectations of stabilization and potential benefits from currency fluctuations and acquisitions. The company's diversified business segments, including Process Management, Industrial Automation, Network Power, Climate Technologies, and Appliance and Tools, provide a degree of stability, though the report indicates potential headwinds from competitive pressures and economic downturns. Management highlighted its strategic positioning and focus on operational improvements to navigate the uncertain economic landscape. Key to Emerson's strategy are ongoing research and development investments to introduce new products and services, a disciplined approach to acquisitions, and maintaining access to capital markets. The company emphasized its commitment to delivering solutions to customers and maintaining a competitive global cost structure, aiming to mitigate the impact of potential raw material price increases and currency fluctuations. Investors should note the company's use of non-GAAP financial measures to provide a clearer view of ongoing operational performance.

Financial Statements
Beta

Key Highlights

  • 1Net sales decreased to $20.9 billion in fiscal year 2009, down from $24.8 billion in 2008, reflecting a challenging economic climate.
  • 2The company projects underlying sales to decline by 5-7% in fiscal year 2010, with reported sales expected to be between -2% and +2%.
  • 3Emerson operates through five diversified segments: Process Management, Industrial Automation, Network Power, Climate Technologies, and Appliance and Tools, indicating a broad market presence.
  • 4Research and development expenses remained significant, totaling $460 million in 2009, underscoring the company's focus on innovation.
  • 5The consolidated order backlog decreased to $4.6 billion in 2009 from $5.5 billion in 2008, suggesting a near-term reduction in future revenue visibility.
  • 6Emerson manages a global footprint with approximately 250 manufacturing locations, a majority of which are located outside the United States.
  • 7The company acknowledged the risks associated with operating in highly competitive markets and the potential impact of economic recessions on its results.

Frequently Asked Questions

In fiscal year 2009, Emerson Electric Co. experienced a decline in net sales to $20.9 billion, down from $24.8 billion in 2008. This was attributed to a challenging economic environment. While earnings from continuing operations also saw a decrease compared to the previous year, the company maintained significant investments in research and development and managed its order backlog.

For fiscal year 2010, Emerson anticipated further declines in underlying sales, projected to be in the range of negative 5% to negative 7%. However, due to expected favorable foreign currency translation and potential acquisitions, reported sales were forecasted to be between positive 2% and negative 2% compared to 2009 levels. The company also expected operating profit margins to be flat to slightly down.

Emerson operates through five distinct business segments: Process Management, Industrial Automation, Network Power, Climate Technologies, and Appliance and Tools. These segments serve a wide range of industrial, commercial, and consumer markets globally, providing a diversified revenue base. In 2009, Process Management represented the largest segment by sales at 29%, followed by Network Power (25%), Industrial Automation (17%), Climate Technologies (15%), and Appliance and Tools (14%).

Emerson highlighted several key risks, including intense competition that could impact prices and demand, the success of research and development for new products, difficulties in integrating acquired businesses, dependence on capital markets for funding, potential shortages or price increases in raw materials, operational disruptions at global facilities, foreign currency fluctuations, adverse market conditions and economic downturns, and potential litigation and environmental regulatory impacts.