Summary
Emerson Electric Co. (EMR) filed an 8-K on August 24, 2011, to provide an update on its order growth trends for the trailing three months ending July 2011. The report indicates that overall order growth for Emerson remained solid, showing a 10-15% increase compared to the prior year for the trailing three-month period. This growth was primarily driven by the industrial-related segments, particularly Process Management and Industrial Automation, which experienced strong demand across global end markets and project/MRO activity. Despite a challenging macroeconomic environment in the U.S. and Europe, Emerson anticipates solid revenue growth in the coming quarters, supported by a strong backlog. However, the company acknowledges that order growth comparisons for Industrial Automation will become more difficult due to significant growth in the prior year. Currency exchange rates provided a positive tailwind, contributing approximately 6 percentage points to overall order growth. Investors should note the varied performance across segments, with Climate Technologies showing slight weakness while Network Power and Tools & Storage demonstrated modest growth.
Key Highlights
- 1Overall Emerson order growth was solid, in the 10-15% range for the trailing three months ending July 2011, a positive sign amidst economic uncertainty.
- 2Process Management and Industrial Automation segments were key growth drivers, benefiting from strong demand in oil and gas and power generation markets, respectively.
- 3Excluding currency impacts, underlying order growth was 6% for the trailing three months, indicating organic strength.
- 4Currency exchange rates favorably impacted orders by approximately 6 percentage points, providing a noticeable boost to reported growth.
- 5The company maintains a strong backlog, providing visibility for solid revenue growth in upcoming quarters.
- 6Performance varied by segment, with Climate Technologies showing softness, likely due to U.S. residential market conditions.
- 7Emerson announced an upcoming presentation at the Citi Global Industrials Conference on September 21, 2011.