Business Context and Reporting Period
This Form 8-K filing by Emerson Electric Co. was submitted on November 20, 2012, pursuant to Regulation FD. The report provides an update on trailing three-month order trends for the period ending October 2012, comparing performance against the prior year.
Key Financial Metrics
The filing focuses on order growth percentages rather than revenue, profit, or cash flow figures. Specific financial metrics such as debt, liquidity, or margins are not provided in this document.
| Segment | Oct 2012 Order Growth (vs. Prior Year) |
|---|---|
| Process Management | +5% to +10% |
| Industrial Automation | -5% to -10% |
| Network Power | -5% to -10% |
| Climate Technologies | -5% to 0% |
| Commercial & Residential Solutions | 0% to +5% |
| Total Emerson | -5% to 0% |
Material Changes and Segment Performance
- Overall Trend: Trailing three-month order trends decreased modestly due to slowing global economic growth and dampened business investment. Currency translation added 2 percentage points to the total.
- Process Management: Orders grew 5% to 10%, driven by oil, gas, chemical, and power industry investments. Underlying orders (excluding 8 percentage points of favorable currency translation) decreased modestly due to a shorter reporting period but remained consistent with the previous month on a comparable basis.
- Industrial Automation: Orders declined 5% to 10% reflecting weak end markets and pressure on global capital goods investment. Europe was particularly weak. Currency translation deducted 2 percentage points.
- Network Power: Orders declined 5% to 10% as telecommunications and IT markets contracted. Weakness in Asia, North America, and Europe offset growth in Latin America.
- Climate Technologies: Orders declined 5% to 0%. U.S. refrigeration and air conditioning demand were weak, while Asia showed strong growth. Currency translation deducted 1 percentage point.
- Commercial & Residential Solutions: Orders grew 0% to 5%. Growth in storage and food waste disposers businesses offset declines in professional tools and wet/dry vacuums.
Outlook, Risks, and Management Commentary
Management expects order patterns to remain slow and choppy in the near term. Poor market visibility in the U.S., Europe, and China is resulting in cautious investment. The filing includes standard forward-looking statements regarding risks such as economic conditions, currency fluctuations, market demand, pricing, and competitive factors.
Upcoming Events: Emerson will host its 2013 Investor Conference on February 11-12 in Columbus, Ohio, including a visit to Emerson Network Power facilities.
Investor Verification Checklist
- Verify the impact of the shorter reporting period on Process Management underlying orders.
- Monitor the specific weakness in the European market for Industrial Automation.
- Assess the sustainability of growth in Asia for Climate Technologies and Process Management.
- Review the 2013 Investor Conference materials for updated guidance on the "slow and choppy" order outlook.
- Confirm the extent of currency translation effects on future quarterly results given the volatility noted.