Business Context and Reporting Period
Emerson Electric Co. filed a Form 8-K on December 17, 2009, pursuant to Regulation FD. The report provides a summary of trailing three-month order trends for the period ending November 2009, comparing performance against the prior year.
Key Financial Metrics and Order Trends
The filing focuses on order rates rather than revenue, profit, or cash flow figures. Key metrics include:
- Total Emerson Orders: The trailing three-month order rate decline moderated to down 5% to 10% compared to the prior year.
- Currency Impact: Currency fluctuations positively impacted total orders by over 10 percentage points due to a weakening U.S. dollar.
- Segment Performance (Trailing 3-Month vs. Prior Year):
- Process Management: Flat to down 5% (Currency impact: +21 percentage points).
- Industrial Automation: Down 20% (Currency impact: +7 percentage points).
- Network Power: Down 5% to 0% (Currency impact: +7 percentage points).
- Climate Technologies: Up 5% to 10%.
- Appliance and Tools: Down 10%.
The filing text does not provide clear values for revenue, profit, cash flow, margins, debt, or liquidity.
Material Changes and Commentary
Management noted sequential improvement in underlying orders (excluding currency) every month since July 2009. Specific drivers included:
- Process Management: Significant positive backlog revaluation due to currency exchange rates.
- Network Power: Growth in China network power systems and embedded power businesses moderated the overall decline.
- Climate Technologies: Benefited from growth in Asia and the temperature sensors business.
- Appliance and Tools: Improved trends driven by growth in consumer-related businesses and easier year-over-year comparisons.
Guidance, Outlook, and Risks
Upcoming Events:
- First quarter 2010 results to be issued on February 2, 2010, followed by an investor conference call.
- Annual Investment Community Update scheduled for February 5, 2010, in New York City.
Risks and Contingencies:
Forward-looking statements are subject to risks including economic and currency conditions, market demand, pricing, and competitive and technological factors. The company undertakes no obligation to update these statements.
Investor Verification Checklist
- Verify the specific revenue and earnings impact of the reported order trends in the upcoming Q1 2010 earnings release.
- Confirm the sustainability of the sequential order improvement observed since July 2009.
- Assess the extent to which the reported order growth is driven by currency revaluation versus organic demand.
- Review the most recent Form 10-K for detailed risk factors regarding economic conditions and market demand.