Business Context and Reporting Period
This Form 8-K filing by Emerson Electric Co. was submitted on November 24, 2009, pursuant to Regulation FD. The report provides a summary of trailing three-month underlying order trends for the period ending October 2009, comparing them to the prior year.
Key Financial Metrics
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 was down 10% to 15% year-over-year.
- Currency Impact: The weakening U.S. dollar positively impacted total orders by approximately 7 percentage points.
- Segment Performance (Trailing 3-Month % Change):
- Process Management: Down 5% to 10% (Currency added ~18 percentage points).
- Industrial Automation: Down 25% to 30%.
- Network Power: Down 10% to 15%.
- Climate Technologies: Up 5%.
- Appliance and Tools: Down 20%.
The filing text does not provide clear values for revenue, profit, cash flow, margins, debt, or liquidity.
Material Changes Versus Prior Period
Emerson reported sequential improvement in underlying orders excluding currency every month since July 2009. While most segments remained negative year-over-year, Climate Technologies achieved positive order growth. Process Management saw significant positive backlog revaluation due to currency exchange rates, masking underlying declines in refining and chemical end markets.
Guidance, Outlook, and Risks
Outlook: Order trends continue to support the sales forecast provided during the November 3, 2009 conference call. Climate Technologies benefited from strong R-22 orders ahead of the January 1, 2010 refrigerant change. Network Power showed signs of stabilization, with China outperforming other regions.
Risks and Contingencies:
- Global capital goods markets remain depressed, keeping Industrial Automation orders at low levels.
- Appliance and Tools continue to face headwinds from low consumer confidence and weak U.S. residential investment.
- Forward-looking statements are subject to risks including economic conditions, currency fluctuations, market demand, pricing, and competitive factors.
Investor Verification Checklist
- Verify the specific sales forecast details from the November 3, 2009 conference call referenced in the report.
- Confirm the magnitude of the backlog revaluation in the Process Management segment due to currency fluctuations.
- Monitor the impact of the January 1, 2010 R-410A refrigerant change on Climate Technologies revenue post-transition.
- Assess the sustainability of sequential order improvements in the Industrial Automation segment given depressed global capital goods markets.