Business Context and Reporting Period
Emerson Electric Co. filed a Form 8-K on August 21, 2013, pursuant to Regulation FD. The report provides unaudited trailing three-month order growth data for the period ending July 2013, comparing performance against the prior year while excluding acquisitions and divestitures.
Key Financial Metrics
The filing focuses on order growth rates rather than revenue, profit, or cash flow figures. Specific financial metrics provided include:
- Total Emerson Orders: Trailing three-month growth for July 2013 was between 0% and +5%.
- Currency Impact: Currency translation added 1 percentage point to total order growth.
- Segment Performance (July 2013 Trailing 3-Months):
- Process Management: +10%
- Industrial Automation: -5% to 0%
- Network Power: -5% to 0%
- Climate Technologies: 0% to +5%
- Commercial & Residential Solutions: 0% to +5%
The filing text does not provide clear values for revenue, net income, operating margins, debt levels, or liquidity positions.
Material Changes and Segment Commentary
Trailing three-month orders growth remained steady, suggesting continued modest improvement in global business investment. Key segment dynamics include:
- Process Management: Remained the primary growth driver, fueled by investment in oil and gas, power, and chemical end markets. Strong increases were reported in Europe, Latin America, and the Middle East/Africa. Asia declined slightly due to softer demand in Australia and India, offset by robust investment in China.
- Industrial Automation: Orders were slightly negative but showed an improving trend due to favorable prior-year comparisons and demand for short-cycle goods. The power generating alternators business remained weak, particularly in Europe, while electrical drives grew.
- Network Power: Orders decreased modestly. Weakness in the U.S. and Latin America for data center and telecommunications infrastructure offset growth in Asia and Europe. Embedded computing and power remained negative.
- Climate Technologies: Orders grew modestly, led by the refrigeration business and strengthening trends in Asia. Air conditioning growth was tempered by mild weather, and market conditions in Europe remained slow.
- Commercial & Residential Solutions: Orders increased moderately, supported by U.S. residential investment, specifically in professional tools and food waste disposers.
Outlook, Risks, and Upcoming Events
Management commentary indicates a trend of modest improvement in global business investment. The filing includes standard forward-looking statements warning of risks related to economic and currency conditions, market demand, pricing, intellectual property, and competitive factors.
Upcoming Investor Events:
- September 10, 2013: Edward L. Monser (President and COO) to present at the Vertical Research Partners Industrials Conference.
- September 17, 2013: David N. Farr (Chairman and CEO) to present at the Citi Industrials Conference.
Key Facts for Investor Verification
- Verify the specific revenue and earnings impact of the reported order growth trends in the subsequent quarterly earnings release.
- Monitor the performance of the Network Power and Industrial Automation segments, which reported negative or flat order growth.
- Assess the sustainability of the +10% growth in Process Management given the regional mix (strong in EMEA/LATAM, weak in parts of Asia).
- Review the impact of currency translation, which added 1 percentage point to total growth, to understand organic performance.