Summary
Emerson Electric Co. (EMR) filed this 8-K on February 24, 2012, providing an update on its "Underlying Orders" for the three months ending January 2012. The report indicates that while overall orders were flat for the trailing three months, there was a slight underlying growth when excluding currency fluctuations. This performance was a result of contrasting trends across its business segments. Key drivers of this performance include robust demand in Process Management, fueled by high oil and gas investments globally, and continued strength in Commercial & Residential Solutions driven by stable U.S. construction and renovation markets. However, Network Power and Climate Technologies segments experienced weakness, particularly in telecommunications and challenging market conditions in air conditioning businesses, respectively. Despite mixed order trends in Network Power, the company reported a significant increase in total backlog, signaling expected sales acceleration in the latter half of fiscal year 2012.
Key Highlights
- 1Total Emerson orders were flat for the trailing three months ending January 2012, but underlying orders (excluding currency) showed slight growth.
- 2Process Management orders demonstrated strong growth, driven by continued global oil and gas investment.
- 3Commercial & Residential Solutions orders remained strong, benefiting from U.S. commercial construction and residential renovation markets.
- 4Network Power orders declined, impacted by weakness in telecommunications and IT markets, though January showed a resumption of growth.
- 5Climate Technologies experienced continued end-market weakness across all geographies, with challenging conditions in the U.S. and China air conditioning sectors.
- 6Total company backlog grew 10-15% year-over-year, with sales conversion expected to accelerate in the second half of 2012.
- 7Backlog in Process Management and Commercial & Residential Solutions grew over 20%, indicating strong future demand in these segments.