Summary
Emerson Electric Co. (EMR) is undergoing a significant strategic portfolio repositioning, marked by agreements to sell its Network Power Systems business and its Power Generation, Motors, and Drives businesses, while simultaneously agreeing to acquire Pentair's Valves & Controls business for approximately $3.15 billion. These divestitures are reported as discontinued operations. The company's core continuing operations are organized into Process Management, Industrial Automation, Climate Technologies, and Commercial & Residential Solutions segments. For fiscal year 2016, Emerson experienced a notable decline in net sales, largely attributed to weak global oil and gas prices, reduced industrial spending, and general economic uncertainty. This led to a significant decrease in earnings from continuing operations and diluted EPS compared to the prior year. Despite the sales and earnings headwinds in 2016, Emerson is actively reshaping its business to focus on higher-growth end markets and improve profitability. The planned acquisition of Pentair's Valves & Controls business is expected to strengthen its Process Management segment. The company is emphasizing its core strengths in automation solutions and climate technologies while managing through a challenging macroeconomic environment. Investors should monitor the successful integration of acquired businesses and the impact of ongoing portfolio adjustments on future financial performance.
Financial Highlights
57 data points| Revenue | $14.52B |
| Cost of Revenue | $8.26B |
| Gross Profit | $6.26B |
| R&D Expenses | $320.00M |
| SG&A Expenses | $3.46B |
| Operating Income | $1.59B |
| Net Income | $1.64B |
| EPS (Basic) | $2.53 |
| EPS (Diluted) | $2.52 |
| Shares Outstanding (Basic) | 644.00M |
| Shares Outstanding (Diluted) | 646.80M |
Key Highlights
- 1Strategic portfolio repositioning underway with agreements to divest Network Power Systems and Power Generation, Motors, and Drives businesses.
- 2Agreement to acquire Pentair's Valves & Controls business for approximately $3.15 billion to enhance the Process Management segment.
- 3Net sales for fiscal year 2016 decreased by 11% to $14.5 billion, with underlying sales down 7%, impacted by weak oil & gas prices and industrial spending.
- 4Earnings from continuing operations decreased significantly by 37% to $1.59 billion, or $2.45 per diluted share.
- 5Process Management and Commercial & Residential Solutions segments saw substantial sales declines in 2016.
- 6The company generated strong operating cash flow of $2.9 billion, with $2.5 billion from continuing operations.
- 7Emerson is forecasting a challenging fiscal year 2017, with consolidated net and underlying sales expected to decline 1-3%.