Summary
Emerson Electric Co. (EMR) filed a Form 8-K on February 25, 2003, reporting on its underlying order trends for the three months ending January 2003. The report indicates a generally positive trend for total Emerson orders, showing a 0% to +5% increase in November 2002 and December 2002, and an acceleration to +5% to +10% in January 2003. This growth is supported by strong performance in HVAC and Appliance and Tools segments, driven by consumer and housing markets. However, underlying business trends, excluding currency effects, are more modest, ranging from -2% to +2%. Investors should note the significant impact of currency fluctuations, which provided a 3% to 5% boost to most segments and the total order figures, and an even larger 8% boost to Process Control. While overall orders are trending upwards, the report highlights ongoing weaknesses in telecommunications, industrial capital markets, and consumer housing/commercial storage related industrial businesses. North America and Europe also continue to face headwinds due to geopolitical uncertainty and reduced capital spending.
Key Highlights
- 1Total Emerson underlying orders showed sequential improvement, moving from 0% to +5% in December 2002 to +5% to +10% in January 2003.
- 2The HVAC segment experienced significant growth (over +20%) for the trailing three months, driven by strong North American housing and Asian markets.
- 3Appliance and Tools also demonstrated consistent growth (0% to +5%) fueled by consumer housing and commercial storage businesses.
- 4Process Control orders saw positive momentum in January 2003, particularly in systems and solutions, though short-cycle orders remain sluggish.
- 5Currency fluctuations provided a notable tailwind, positively impacting order growth by an estimated 3% to 5% across most segments.
- 6Weakness persists in the telecommunications market and industrial capital markets, impacting the Electronics and Telecommunications segment.
- 7Geopolitical uncertainty and reduced capital spending are contributing to weak conditions in North America and Europe.