Summary
Emerson Electric Co. (EMR) filed an 8-K on December 19, 2016, to provide an update on its 3-month trailing orders through November 2016. The report indicates a continued decline in total company orders, down 10% to 5% for the trailing three months ending November 2016. This trend is largely driven by the Automation Solutions segment, which experienced a 15% to 10% decrease in orders, reflecting ongoing weakness in energy-related capital spending. However, there are signs of stabilization and potential improvement, particularly in North America for Automation Solutions, with improved demand for analytical instrumentation and flow devices in China. The Commercial & Residential Solutions segment showed more resilience, with orders increasing in the high-single digits for the trailing three months ending November 2016. This growth is attributed to favorable conditions in HVAC, refrigeration, and U.S. construction markets, with particular strength in North American air conditioning and China heat pump markets. Emerson anticipates mid-single digit sales growth for this segment in the first quarter. Despite the overall order challenges, the company is looking ahead to strategic portfolio repositioning actions.
Key Highlights
- 1Total Emerson trailing 3-month orders for November 2016 were down 10% to 5% compared to the prior year.
- 2Automation Solutions segment orders continued to decline, ranging from -15% to -10% for the trailing 3-month period ending November 2016.
- 3Signs of stabilization are emerging in the Automation Solutions segment, with improving pace of orders in November, especially in North America and China.
- 4Commercial & Residential Solutions segment orders increased by high-single digits for the trailing 3-month period ending November 2016.
- 5Strong performance in Commercial & Residential Solutions is driven by HVAC, refrigeration, and U.S. construction markets.
- 6Emerson expects approximately a 10% decline in sales for the Automation Solutions segment in the first quarter.
- 7Emerson anticipates mid-single digit sales growth for the Commercial & Residential Solutions segment in the first quarter.