Emerson Expects Sales To Improve In 2nd Half Of Fiscal 2010
By Bob Tita, Of DOW JONES NEWSWIRES
CHICAGO -(Dow Jones)- Emerson Electric Co. (EMR) predicted Tuesday its overall
sales in 2010 will be 5% to 7% lower than 2009, but expects to see improving
demand for its industrial equipment and components during the second half of the
year.
The company reported a 26% drop in fiscal fourth-quarter profit on lower sales
across all its businesses segments. Emerson's performance continues to be
weighed down by companies' reduction in spending on factories and commercial
buildings.
Emerson, whose business lines include factory automation and process control
equipment, backup power systems for data centers and climate control
technologies, responded by cutting its expenses, included trimming 20,000
positions and closing 20 factories during its fiscal year ended Sept. 30.
"It's been a very difficult year," said Chairman and Chief Executive David
Farr during a conference call with analysts. "I'm looking forward to growth in
the second half of 2010."
Farr predicted that demand for Emerson's products will be strongest from
emerging markets, such as China and India. About 30% Emerson's sales now come
from emerging markets and Farr expects emerging markets to account for 40% of
sales in five years.
"It's where the market is going and we do extremely well there," Farr said.
Farr expects sales in the U.S. and Europe to remain under pressure for the
foreseeable future. He said the company is seeing "slight benefits" from the
U.S. economic stimulus program. But he added that the $787 billion program "was
a waste" because of the lack of money allocated for public infrastructure and
capital projects.
"I don't think it should have been done," Farr said.
Sales declined across all of Emerson's business segments in the fourth
quarter, while profits were down in every segment but climate technologies,
which reported a 6.5% increase. In process management, the company's largest
unit, sales fell 13%, while income plunged 31%.
The St. Louis company reported an overall profit of $506 million, or 67 cents
a share, down from $688 million, or 88 cents a share, a year earlier. Revenue
dropped 21% to $5.32 billion.
Analysts estimated earnings of 60 cents on revenue of $5.3 billion, according
to a poll by Thomson Reuters.
For the 2009 fiscal year, Emerson earned $1.72 billion, or $2.27 a share, down
28% from $2.41 billion, or $3.11 a share, in 2008. Sales for the year fell 16%
to $20.9 billion.
Emerson's stock closed the regular session up 2.15%, or 82 cents, at $38.97 a
share, and was flat in after-hours trading.
- By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com
(END) Dow Jones Newswires
11-03-091656ET
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