Summary
Emerson Electric Co. (EMR) filed an 8-K on July 27, 2011, providing an update on its underlying orders for the three months ending in June 2011. While overall order growth remained robust at 10-15% year-over-year for the trailing three months, the company noted a discernible weakening of general business activity in June and July, attributing this slowdown to decelerating U.S. and European economies and ongoing global economic uncertainties. Despite the emerging headwinds, key segments like Process Management and Industrial Automation showed continued strength, driven by project and MRO demand and the power generation sector, respectively. However, these businesses are expected to face tougher year-over-year comparisons moving forward. The report also highlights currency fluctuations, which positively impacted reported order growth by approximately 7 percentage points globally. Investors should be aware of the approaching Q3 2011 earnings release and conference call scheduled for August 2, 2011.
Key Highlights
- 1Overall Emerson underlying orders showed a trailing 3-month average growth of +10% to +15% compared to the prior year.
- 2A notable slowdown in general business activity was observed in June and July, with U.S. and European economies identified as weak spots.
- 3Process Management and Industrial Automation segments demonstrated continued strong order growth, though expected to face challenging comparisons ahead.
- 4Network Power and Tools & Storage segments showed positive, albeit more modest, order growth.
- 5Climate Technologies experienced slightly negative order growth for the trailing three months, influenced by U.S. residential and European/Asian refrigeration markets.
- 6Currency exchange rates had a positive impact, boosting global order growth by approximately 7 percentage points.
- 7Emerson announced its Q3 2011 earnings release and investor conference call scheduled for August 2, 2011.