Summary
This 8-K filing from Emerson Electric Co. (EMR) on June 22, 2015, provides an update on its three-month trailing orders growth as of May 2015, highlighting significant headwinds impacting its performance. The company is experiencing broad-based order declines across its key segments, driven by a combination of factors including the sharp drop in oil prices, a global slowdown in capital spending, and a strong U.S. dollar which is negatively affecting reported sales through currency translation. Investors should note the pervasive nature of these challenges, with every segment showing negative order growth. The company explicitly states that underlying orders were down 10% in May, reflecting sluggish market conditions globally. Consequently, Emerson is now forecasting a moderately negative underlying sales performance for the third quarter of fiscal year 2015, with reported sales expected to decline by approximately 11% due to currency impacts and divestitures. The filing also informs investors about an upcoming earnings release and conference call scheduled for August 4, 2015.
Key Highlights
- 1Trailing three-month orders (ending May 2015) showed negative growth across all segments, with total Emerson orders down 15% to -10% year-over-year.
- 2Key drivers for the order decline include the sharp fall in oil prices, a global slowdown in capital spending, and significant currency headwinds from a strong U.S. dollar.
- 3Underlying orders (excluding currency and divestitures) were down 10% for the three months ending May 2015, indicating weak underlying market conditions.
- 4Emerson now expects third quarter underlying sales to be moderately negative compared to the prior year, with reported sales projected to decrease by approximately 11%.
- 5Specific segment challenges include Process Management and Industrial Automation being impacted by oil prices and industrial spending weakness, respectively.
- 6Network Power orders reflect weak demand for data center and telecommunications infrastructure, while Climate Technologies faces inventory adjustments and weather impacts.
- 7The company will report its third quarter 2015 results and host a conference call on August 4, 2015, with a webcast available on its investor relations website.