Summary
This 8-K filing from Emerson Electric Co. (EMR) on June 22, 2016, provides an update on the company's order trends for the three months ending May 2016. Overall, Emerson experienced a 5% decrease in orders compared to the prior year, with underlying orders (excluding currency translation) down 6%. This decline is primarily attributed to reduced operational and capital spending by global oil and gas customers, as well as persistently lower general industrial capital spending. The filing details mixed performance across segments. While Network Power and Commercial & Residential Solutions saw favorable market conditions leading to growth, Process Management and Industrial Automation experienced declines due to depressed spending levels, particularly in energy and industrial markets. Climate Technologies saw a slight decrease, influenced by unfavorable weather patterns in the U.S. In response to these order trends, Emerson expects to increase its restructuring expenses for fiscal year 2016 to approximately $90-100 million, up from the previously guided $70-80 million. This adjustment reflects the company's proactive approach to managing costs in light of evolving market conditions and aligns with earlier commentary about potential additional restructuring if order trends did not improve.
Key Highlights
- 1Total Emerson orders decreased 5% in the trailing three months ending May 2016, with underlying orders down 6%.
- 2Reduced capital and operational spending by oil and gas customers and weak industrial spending are the primary drivers of the order decline.
- 3Network Power and Commercial & Residential Solutions segments showed positive order growth, driven by data center infrastructure and favorable construction markets, respectively.
- 4Process Management and Industrial Automation segments experienced order declines due to the challenging energy and industrial end markets.
- 5Climate Technologies orders saw a slight decrease, attributed to unfavorable weather conditions in the U.S.
- 6Emerson anticipates increasing fiscal year 2016 restructuring expenses to $90-100 million, up from the prior guidance of $70-80 million, due to order trends.
- 7The company notes that currency translation had a negligible impact on the overall order figures for May.