Summary
Emerson Electric Co. reported a challenging third quarter and nine-month period ending June 30, 2009, reflecting the severe impact of the global economic downturn. Net sales for the third quarter declined 22% to $5.1 billion, and for the nine-month period, sales decreased 14% to $15.6 billion. This downturn was driven by significant drops in customer spending on capital goods and consumer products across most regions, with the exception of some underlying sales growth in Asia and Canada. Despite the sales decline, the company demonstrated resilience through cost management and operational efficiencies. The company incurred significant rationalization costs totaling $190 million for the nine months ended June 30, 2009, aimed at improving its cost structure for future recovery. While net earnings and earnings per share saw a substantial decrease compared to the prior year, Emerson maintained a strong financial position, generating substantial operating cash flow. The company also strategically executed acquisitions, notably Roxar ASA and Trident Powercraft, during the period.
Financial Highlights
51 data points| Revenue | $4.88B |
| Cost of Revenue | $3.25B |
| Gross Profit | $1.80B |
| SG&A Expenses | $1.09B |
| Operating Income | $383.00M |
| Net Income | $387.00M |
| EPS (Basic) | $0.52 |
| EPS (Diluted) | $0.51 |
| Shares Outstanding (Basic) | 749.60M |
| Shares Outstanding (Diluted) | 754.70M |
Key Highlights
- 1Net sales declined significantly, with a 22% drop in the third quarter and a 14% decrease for the first nine months of fiscal 2009, primarily due to the global economic recession impacting customer spending.
- 2Earnings per share (EPS) saw a considerable decrease, with diluted EPS for the nine months ending June 30, 2009, at $1.60, down from $2.18 in the prior year.
- 3The company incurred substantial 'rationalization of operations' expenses, totaling $190 million for the nine months, reflecting workforce reductions and facility consolidations to improve cost structure.
- 4Despite economic headwinds, Emerson's financial position remained strong, characterized by substantial operating cash flow of $1.73 billion for the nine months, which funded dividends and capital expenditures.
- 5Acquisitions were a notable activity, including Roxar ASA for $190 million and Trident Powercraft for $125 million, aiming to bolster specific business segments.
- 6Foreign currency translation had a negative impact on reported sales and earnings due to the strengthening U.S. dollar.
- 7Debt-to-capital ratios increased, with total debt to total capital rising to 38.0% as of June 30, 2009, driven by increased borrowings for acquisitions and a decrease in equity.