8-KRegulation FD

EMERSON ELECTRIC CO 8-K Report, Regulation FD Disclosure (Oct 16, 2015)

Filed October 16, 2015For Securities:EMR

Summary

This 8-K filing from Emerson Electric Co. (EMR) on October 16, 2015, provides an update on the company's orders growth for the three months ending September 2015. The report indicates a significant decline in orders across most segments, with total Emerson orders down 16% year-over-year for the trailing three-month period. This weakness is attributed to several macroeconomic factors, including persistently low oil prices, a global slowdown in industrial capital spending, reduced demand in China, and the strength of the U.S. dollar, which negatively impacted reported figures through currency translation. Key segments experiencing order declines include Process Management and Industrial Automation, heavily influenced by the downturn in the oil and gas sector and general industrial spending. Network Power and Climate Technologies also saw decreases, with the latter impacted by challenging year-over-year comparisons. Commercial & Residential Solutions experienced a moderate decrease. The company also announced a transition from monthly to quarterly reporting of orders data, with the next release scheduled for December.

Key Highlights

  • 1Total Emerson orders declined 16% for the trailing three months ending September 2015, with underlying orders down 11%.
  • 2Weakness in orders is attributed to low oil prices, global industrial spending slowdown, China's demand, and U.S. dollar strength (currency translation deducted 5 percentage points).
  • 3Process Management and Industrial Automation orders were significantly impacted by reduced capital and operational spending in the oil and gas sector and general industrial weakness.
  • 4Network Power and Climate Technologies segments also experienced order declines, with foreign currency translation a notable factor.
  • 5Commercial & Residential Solutions saw a moderate decrease in orders, impacted by specific product lines.
  • 6Emerson Electric will transition its orders reporting from monthly to quarterly, with the next update in December 2015.
  • 7The company acknowledges risks and uncertainties related to its strategic portfolio repositioning, economic conditions, and currency fluctuations in its forward-looking statements.

Frequently Asked Questions

The decline in orders is primarily driven by macroeconomic factors including persistently low oil prices, a global slowdown in industrial capital spending, weakened demand in China, and the strong U.S. dollar which negatively impacts international sales translation. Specific segments like Process Management and Industrial Automation are particularly affected by the oil and gas sector downturn.

Currency translation had a negative impact on reported orders. For the trailing three months ending September 2015, currency translation deducted 5 percentage points from the total order growth. The impact varied by segment, with Process Management seeing a 6-percentage point deduction and Industrial Automation a 7-percentage point deduction.

Emerson Electric is transitioning its orders reporting from a monthly cadence to a quarterly basis. The next orders update will be provided in December 2015 and will encompass data for September, October, and November. Subsequent reports will follow a quarterly schedule in December, March, June, and September.

The Process Management and Industrial Automation segments are experiencing the most significant declines, largely due to the impact of low oil prices and reduced industrial capital spending. Climate Technologies also faced challenges due to difficult year-over-year comparisons and reduced demand in China. Commercial & Residential Solutions saw a moderate decrease, with some product lines performing better than others.