Business Context and Reporting Period
Emerson Electric Co. filed a Form 8-K on March 24, 2009, pursuant to Regulation FD. The report provides a summary of trailing three-month order trends ending February 2009, highlighting significant declines across all business segments due to deteriorating global economic conditions.
Key Financial Metrics and Order Trends
The filing focuses on order rates rather than revenue or profit figures. The trailing three-month order rate for the total company remained in the range of negative 20% to 25% compared to the prior year. Currency exchange rates negatively impacted order growth by approximately 4 percentage points.
| Segment | Trailing 3-Month Order Change (vs. Prior Year) |
|---|---|
| Process Management | -15% to -20% |
| Industrial Automation | -35% to -30% |
| Network Power | -20% to -15% |
| Climate Technologies | -30% to -25% |
| Appliance and Tools | -25% |
The filing does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity.
Material Changes and Segment Analysis
- Overall Trend: Order rates have declined at similar levels in January and February, with no improvement seen in end-markets. A significant step-down occurred in residential, nonresidential, and capital-related businesses.
- Process Management: Orders declined 15% to 20%. Currency impacted growth by approximately 6 percentage points. The power market remained strong, while chemical and refining markets slowed.
- Industrial Automation: Orders weakened broadly due to capital spending slowdowns. Currency impacted growth by approximately 5 percentage points.
- Network Power: Weakness in telecommunication and data-center computing drove declines, though China power systems showed strength.
- Climate Technologies: Trends remained weak across all markets, including weak preseason U.S. air-conditioning and refrigeration aftermarket patterns.
- Appliance and Tools: Negatively impacted by weakness in U.S. consumer, residential, and nonresidential markets.
Outlook, Risks, and Management Commentary
Management notes that global customers are reducing inventory levels and business spending in anticipation of many quarters of tough economics. Forecasting visibility remains limited. The company is focusing on cash generation and executing restructuring programs.
Upcoming Events:
- Investor update conference call on April 7, 2009, to discuss business outlook.
- Second quarter 2009 results to be issued on May 5, 2009.
Risks: Forward-looking statements are subject to risks including economic and currency conditions, market demand, pricing, and competitive factors.
Investor Verification Checklist
- Verify the specific impact of currency exchange rates on the upcoming Q2 2009 earnings report.
- Monitor the April 7, 2009, investor conference call for updated guidance on order trends and restructuring progress.
- Assess the sustainability of the "strong" power market within Process Management versus the slowing chemical and refining sectors.
- Review the May 5, 2009, Q2 earnings release for actual revenue and profit figures to compare against the current order rate declines.