8-KRegulation FD

EMERSON ELECTRIC CO 8-K Report, Regulation FD Disclosure (Jun 25, 2013)

Filed June 25, 2013For Securities:EMR

Summary

This 8-K filing from Emerson Electric Co. (EMR) on June 25, 2013, provides an update on the company's 3-month trailing average orders growth as of May 2013. Overall orders declined slightly by 1% compared to the prior year, reflecting continued sluggish global macroeconomic trends and low business confidence across key end markets. Management highlighted specific challenges in China due to liquidity constraints impacting smaller companies, which is expected to contribute to a sales decline in the third quarter. Despite moderate growth in Process Management and Commercial & Residential Solutions, this was offset by weakness in Industrial Automation and Network Power, along with a modest decline in Climate Technologies. The report anticipates that persisting weak order trends will lead to a decline in third quarter sales and earnings year-over-year, with earnings also impacted by prior-year factors like Thailand flooding recovery. Investors should note the upcoming third-quarter earnings release and conference call scheduled for August 6, 2013.

Key Highlights

  • 1Overall trailing 3-month orders declined 1% as of May 2013, attributed to global macroeconomic headwinds and low business confidence.
  • 2Specific challenges noted in China due to liquidity constraints impacting small/mid-sized companies, expected to affect Q3 sales.
  • 3Process Management and Commercial & Residential Solutions showed moderate order growth, but were outpaced by declines in other segments.
  • 4Industrial Automation and Network Power experienced continued order declines.
  • 5Climate Technologies saw a modest order decline due to high channel inventory and mild weather.
  • 6Management forecasts a decline in Q3 sales and earnings compared to the prior year, influenced by existing weak order trends and specific year-ago comparatives.
  • 7Emerson announced its Q3 2013 earnings release and conference call is scheduled for August 6, 2013.

Frequently Asked Questions

The primary driver is the continued sluggishness in global macroeconomic trends and low business confidence across most of Emerson's end markets. This has resulted in a 1% decline in trailing three-month orders as of May 2013.

China is highlighted as a particular concern due to liquidity constraints impacting smaller companies, which is creating operational challenges and is expected to contribute to a sales decline for Emerson in the third quarter. This situation is also beginning to affect broader Southeast Asia due to regional uncertainty.

Industrial Automation and Network Power continue to experience order declines. Climate Technologies also saw a modest decline, impacted by high channel inventory and mild weather. These weak trends in several segments are offsetting moderate growth in Process Management and Commercial & Residential Solutions.

Management anticipates that the persisting weak order trends will lead to a decline in third-quarter sales and earnings compared to the prior year. Earnings comparisons will also be significantly affected by the receipt of dumping duties and exceptional operating leverage related to the Thailand flooding recovery in the prior year.