Summary
This 8-K filing from Emerson Electric Co. (EMR) provides an update on the estimated financial impact of the coronavirus (COVID-19) outbreak on the company's second-quarter fiscal year 2020 sales. Initially estimated at $75 million to $100 million in negative impact, Emerson now projects a hit of at least $100 million to $150 million to Q2 sales. While the company expects to recover approximately half of this amount within the fiscal year, this recovery is contingent on the duration of the outbreak and the eventual easing of its effects. The filing also details operational status in China, noting that while most key facilities are operational with significant production capacity restored, supply chain and logistics continue to face challenges.
Key Highlights
- 1Emerson now expects the coronavirus to negatively impact Q2 FY2020 sales by $100 million to $150 million, an increase from previous estimates.
- 2Approximately 50% of the projected Q2 sales impact is anticipated to be recovered within the current fiscal year, subject to the pandemic's duration.
- 3All key Emerson facilities in China are operational, with ~85% of production capacity available on average.
- 4Over 95% of Emerson's supply chain has restarted production, though at ~57% average capacity.
- 5Logistics in China remain a challenge, with material moving at ~75% of normal rates and experiencing increased transit times and costs.
- 6Emerson will report its Q2 FY2020 results on May 5, 2020, with a conference call and webcast.
- 7The company reiterates forward-looking statements include risks and uncertainties, notably the impact of the coronavirus.