Business Context and Reporting Period
Emerson Electric Co. filed a Form 8-K on October 21, 2013, pursuant to Regulation FD. The report provides an update on trailing three-month order growth for the period ending September 2013, reflecting the company's performance across its global segments during a modest global economic recovery.
Key Financial Metrics
The filing focuses on order growth rates rather than revenue, profit, or cash flow figures. Key metrics include:
- Total Emerson Orders: Trailing three-month orders increased by 2% versus the prior year.
- Excluding Embedded Computing & Power: Orders growth approached 4%.
- Currency Impact: Translation effects were negligible.
- Segment Performance (September 2013):
- Process Management: 0 to +5% growth.
- Industrial Automation: +5% growth.
- Network Power: -5 to 0% growth.
- Climate Technologies: +5% growth.
- Commercial & Residential Solutions: +5 to +10% growth.
The filing text does not provide clear values for revenue, net income, operating margins, debt levels, or liquidity positions.
Material Changes and Segment Trends
Order growth remained consistent with the prior three months, though demand was uneven across end markets.
- Process Management: Orders grew 4% overall, driven by robust growth in China and continued investment in energy and chemical markets. North American trends improved, while Europe slowed.
- Industrial Automation: Underlying orders grew for the first time since April 2012, supported by industrial goods demand and renewable energy projects. The power generating alternators business remained negative but improved.
- Network Power: Orders declined modestly as growth in network power systems was offset by a decrease in embedded computing and power. Telecommunications infrastructure investment accelerated.
- Climate Technologies: Moderate growth led by Europe and global refrigeration markets; U.S. air conditioning grew slightly.
- Commercial & Residential Solutions: Solid demand in U.S. residential markets, with particular strength in professional tools and food waste disposers.
Outlook, Risks, and Upcoming Events
Management expects trends to remain favorable in Industrial Automation as Europe and China strengthen. Near-term demand in Network Power (excluding embedded computing) is expected to remain positive.
Upcoming Event: Emerson will report fourth quarter and fiscal year 2013 results on Tuesday, November 5, 2013, with a conference call at 3:00 p.m. ET.
Risks: Forward-looking statements are subject to risks including economic and currency conditions, market demand, pricing, intellectual property protection, and competitive factors.
Investor Verification Checklist
- Verify the full financial results (revenue, earnings, cash flow) when reported on November 5, 2013.
- Confirm the specific contribution of the "Embedded Computing & Power" divestiture or decline to the Network Power segment's negative growth.
- Monitor the sustainability of the 4% underlying order growth excluding embedded computing.
- Review the detailed regional breakdown for Process Management, specifically the slowdown in Europe versus growth in Asia.