What is the primary reason for the weakness in the Network Power and Climate Technologies segments?

The weakness in Network Power is attributed to delayed telecommunications infrastructure investments due to industry consolidation and economic uncertainty, as well as supply chain disruptions from microprocessor delays and the Thailand flooding. Climate Technologies is affected by North America OEM inventory liquidation, global residential construction weakness, and European economic uncertainty.

How is Emerson expecting the Thailand flooding to impact its financials?

The Thailand flooding is estimated to have a $300 to $400 million impact on sales and will put significant pressure on first-quarter 2012 results, contributing to a projected sales decrease of 3% to 5% for the quarter. However, recovery from this impact is anticipated to support the full-year 2012 outlook.

Despite the short-term challenges, why is Emerson maintaining its full-year 2012 outlook?

Emerson is maintaining its full-year 2012 outlook due to a strong backlog of $6.6 billion, the stability of its industrial businesses, the expectation of improvement in Network Power end markets, and the anticipated recovery from the Thailand supply chain disruption. The company forecasts underlying sales and orders to grow by 5% to 7% for the full year.

What financial restructuring actions does Emerson plan to take in 2012?

Emerson plans to incur restructuring expenses of $100 to $125 million in 2012. Additionally, a previously announced $20 million charge related to post-65 retiree medical benefits will be recognized in the first quarter of 2012.

EMR 8-K: Regulation FD — Dec 21, 2011

Summary

Emerson Electric Co. (EMR) has filed an 8-K report detailing order trends for the trailing three months ending November 2011. While overall orders showed a modest increase (0% to +5% for November), performance varied significantly across segments. Process Management and Tools and Storage demonstrated continued strength, driven by oil and gas investments and improving construction markets, respectively. However, Network Power and Climate Technologies experienced weakness due to supply chain disruptions from the Thailand flooding, delays in telecommunications infrastructure investments, and economic uncertainty in Europe. Despite these short-term challenges, which are expected to pressure first-quarter 2012 results, Emerson maintains its full-year 2012 outlook. The company projects underlying sales and orders to increase by 5% to 7%, with reported sales up 4% to 6%. A significant backlog of $6.6 billion, expected improvements in Network Power, and recovery from supply chain issues provide confidence in this outlook. The company also anticipates a restructuring charge of $100 to $125 million in 2012.

Key Highlights

1Overall trailing three-month underlying orders growth for Emerson flattened in November 2011, showing a 0% to +5% change year-over-year.
2Process Management and Tools and Storage segments demonstrated continued strength, with orders up +5% to +10% and +5% to +15%, respectively, in November.
3Network Power and Climate Technologies segments faced headwinds, with Network Power orders down -5% to 0% and Climate Technologies orders down -10% to -5% in November.
4Thailand flooding and supply chain disruptions are expected to impact first-quarter 2012 results, with sales projected to be down 3% to 5% year-over-year.
5Emerson reaffirms its full-year 2012 outlook, expecting underlying sales and orders to increase by 5% to 7%.
6A strong backlog of $6.6 billion at the end of November 2011 supports the company's 2012 guidance.
7The company anticipates a restructuring charge of $100 to $125 million in 2012.

EMERSON ELECTRIC CO 8-K Report, Regulation FD Disclosure (Dec 21, 2011)

Summary

Key Highlights

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