8-KRegulation FD

EMERSON ELECTRIC CO 8-K Report, Regulation FD Disclosure (Nov 25, 2014)

Filed November 25, 2014For Securities:EMR

Summary

This 8-K filing from Emerson Electric Co. (EMR) on November 25, 2014, provides an update on the company's order growth trends for the three months ending October 2014. Overall, Emerson reported solid, albeit mixed, global market conditions with a reported total order growth of +5% for the trailing three months ending October. This growth was notably impacted by currency translation, which reduced reported growth by 5 percentage points, indicating a stronger U.S. dollar. Key business segments like Process Management and Climate Technologies showed robust underlying growth, driven by specific market dynamics such as oil and gas investments in Process Management and a regulatory-driven demand surge in Climate Technologies related to HVAC systems. While Industrial Automation experienced a slight decline, other segments like Network Power and Commercial & Residential Solutions showed improved or solid trends, respectively. Investors should note the commentary on mixed regional demand and the impact of currency volatility, which are expected to continue influencing performance.

Key Highlights

  • 1Emerson Electric reported a total order growth of +5% for the trailing three months ending October 2014.
  • 2Currency translation negatively impacted reported order growth by 5 percentage points, highlighting the strengthening U.S. dollar.
  • 3Process Management and Climate Technologies demonstrated robust underlying order growth, driven by oil/gas markets and HVAC regulatory changes, respectively.
  • 4Industrial Automation orders declined slightly, influenced by weak European demand and currency translation.
  • 5Network Power order trends improved, primarily due to strength in data center markets offsetting weak telecom investments.
  • 6Commercial & Residential Solutions maintained solid order growth, supported by favorable North American market conditions.
  • 7A large project in Network Power and inventory build in HVAC were noted as significant contributors to recent order trends.

Frequently Asked Questions

Emerson reported a solid total order growth of +5% for the trailing three months ending October 2014. However, this figure was impacted by currency translation, which reduced the reported growth by 5 percentage points, suggesting that underlying growth was likely stronger when excluding currency effects.

Process Management and Climate Technologies showed robust underlying order growth. Process Management benefited from strength in oil and gas markets across North America, Europe, and the Middle East/Africa. Climate Technologies saw significant growth, especially in U.S. residential air conditioning, driven by demand acceleration ahead of new regulatory changes effective January 1, 2015.

The primary factors impacting reported order growth are mixed global market conditions, heightened currency volatility (specifically a strengthening U.S. dollar), and a large project in Network Power as well as inventory build in the HVAC industry. Currency translation alone deducted 5 percentage points from the total reported growth.

North America showed continued strong momentum, supported by energy investment and HVAC industry growth. Demand in other regions was mixed. Europe showed weak demand for Industrial Automation, while Asia and Latin America had mixed but slow demand in Process Management and were weak in Network Power.