Summary
Emerson Electric Co. (EMR) provided an update on its three-month trailing orders for the period ending March 2019. Overall, the company experienced a 2% increase in total trailing three-month orders, with underlying orders (excluding currency fluctuations) up 4%. This moderation from the first two months of the quarter (where underlying orders were in the 5-10% range) was primarily driven by a slowdown in the Commercial & Residential Solutions segment, which saw flat underlying orders after accounting for currency impacts. The Automation Solutions segment showed resilience, with underlying orders up 7%. Growth was broad-based globally, particularly in systems, maintenance, and repair spending. However, moderating order growth in the Americas was noted, partly due to upstream oil & gas customers pausing investment decisions amidst price volatility, although recovery is anticipated with stabilized oil prices. Concerns were also raised about pipeline capacity constraints in North America potentially pacing investment over the next 3-6 months. The North America Industrial Solutions business also experienced a slowdown due to softer short-cycle demand and channel inventory adjustments. The Commercial & Residential Solutions segment's flat underlying orders were impacted by a continued, though improving, negative trend in Asia Climate Technologies, partially offset by China's demand. Excluding this business, underlying orders in Commercial & Residential Solutions were up low-single digits, supported by stable North American AC and global cold chain markets. However, weather and pre-buy inventory ahead of price increases also unfavorably impacted North American order pace. Emerson also announced its Q2 2019 earnings call for May 7, 2019.
Key Highlights
- 1Total Emerson trailing three-month orders increased by 2%, with underlying orders (excluding currency impact) up 4%.
- 2Automation Solutions segment showed robust underlying order growth of 7%, with positive trends across all world areas, driven by systems, maintenance, and repair spending.
- 3Commercial & Residential Solutions segment experienced flat underlying orders, with a continued recovery plan in Asia Climate Technologies.
- 4Underlying orders growth in Automation Solutions moderated in March from prior months, influenced by upstream oil & gas customers pausing investment.
- 5Pipeline capacity constraints in North American oil and gas regions are a watch item for the next 3-6 months.
- 6North America Industrial Solutions business slowed due to softer short-cycle demand and channel inventory re-balancing.
- 7Emerson will report Q2 2019 results on May 7, 2019.