Summary
Emerson Electric Co. (EMR) filed an 8-K on November 23, 2011, providing an update on underlying order trends for the trailing three-month period ending October 2011. The report indicates a mixed performance across its business segments, with overall moderate growth influenced by prior year comparisons and unfavorable currency exchange rates, which negatively impacted growth by over 3 percentage points when excluded. Process Management continued to be the primary driver of growth, largely due to global oil and gas investments. Industrial Automation experienced slowing growth, while Network Power orders were flat. Climate Technologies continued to show weakness, and Tools and Storage demonstrated accelerating growth, benefiting from improvements in U.S. commercial construction. Investors should note the continued strength in Process Management, which is a positive indicator for a significant portion of Emerson's business. However, the weakness in Climate Technologies and the slowing growth in Industrial Automation warrant attention. The company also highlighted its upcoming annual investor conference on February 14, 2012, where further details and outlook are expected. Investors are reminded of the forward-looking nature of some statements and the inherent risks and uncertainties involved.
Key Highlights
- 1Overall underlying orders for the trailing three months ending October 2011 showed moderate growth (flat to +5%), impacted by currency headwinds.
- 2Excluding currency impacts (which deducted over 3 percentage points), underlying orders grew by 8% for the trailing three-month period.
- 3Process Management remains the strongest segment, driven by global oil and gas investment, though growth comparisons are affected by a large 2010 project booking.
- 4Industrial Automation order growth is slowing due to softening capital goods end markets, with weakness in electrical drives and wind/solar energy sectors.
- 5Network Power orders were flat, impacted by weak global end markets and a strategic customer repositioning initiative.
- 6Climate Technologies orders continue to be weak, particularly in U.S. and European residential and commercial markets.
- 7Tools and Storage orders accelerated, showing broad-based growth driven by improvements in U.S. commercial construction.