EMERSON ELECTRIC CO Quarterly Report for Q2 Ended Mar 31, 2009

Summary

Emerson Electric Co. (EMR) reported a challenging second quarter and first six months of fiscal year 2009, reflecting the significant global economic downturn. Net sales for the three months ended March 31, 2009, decreased by 16% to $5,087 million, and for the six months, sales fell by 9% to $10,502 million. This decline was primarily driven by reduced underlying sales across most segments, particularly in Industrial Automation, Network Power, Climate Technologies, and Appliance and Tools, impacted by decreased business investment and consumer spending. Unfavorable foreign currency translation also negatively affected results. Despite the revenue decline, the company demonstrated resilience through cost reduction efforts and strategic acquisitions. The company maintained a strong financial position with robust operating cash flow, although net cash did decrease by $270 million in the first six months of 2009. Management anticipates continued economic weakness for the remainder of the fiscal year but forecasts 2009 earnings per share between $2.40 and $2.60. The company also made strategic acquisitions, including Roxar ASA, Trident Power, and System Plast S.p.A., to bolster its portfolio.

Key Highlights

• 1Net sales declined significantly, down 16% for the quarter and 9% year-to-date, reflecting the challenging economic environment.
• 2Earnings per share (EPS) also saw a substantial decrease, with diluted EPS falling to $0.49 for the quarter and $1.09 for the six months, down from $0.69 and $1.40 respectively in the prior year.
• 3Operating cash flow decreased to $818 million for the six months ended March 31, 2009, from $1,171 million in the prior year, impacting overall cash generation.
• 4The company is undertaking rationalization efforts, with $107 million in expenses for the six months, impacting "Other deductions, net" which increased significantly.
• 5Despite the downturn, Emerson made several strategic acquisitions, including Roxar ASA, Trident Power, and System Plast S.p.A., indicating a focus on long-term growth.
• 6The balance sheet shows a decrease in cash and equivalents to $1,507 million from $1,777 million, and an increase in total debt to total capital ratio to 39.8% from 33.1%.
• 7The company provided an outlook for fiscal year 2009, forecasting sales between $21.0 billion and $21.7 billion and earnings per share in the range of $2.40 to $2.60.

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