Emerson post financial results
USA – Emerson today announced net sales in the second quarter ended March 31, 2016 were down 9 percent, with underlying sales down 5 percent excluding unfavorable currency translation and an impact from divestitures of 2 percent each. As anticipated, oil and gas and industrial end markets remained under pressure during the quarter but within our expectations. Underlying sales for both Process Management and Industrial Automation decreased versus the prior year, but improved slightly versus the previous quarter. Climate Technologies and Commercial & Residential Solutions reflected modest levels of underlying growth supported by favorable conditions in global HVAC and U.S. construction end markets. Network Power underlying sales were down modestly, but order rates for data center and telecommunications infrastructure improved, setting the segment up for positive sales growth in the third quarter. Emerson underlying sales were negative in all regions, except Europe which was flat.
Restructuring benefits and better operational performance delivered improved profit levels as adjusted earnings per share of $0.66 slightly exceeded the Company’s expected range of $0.60 to $0.65. Segment margins in Network Power, Climate Technologies and Commercial & Residential Solutions improved versus the prior year, while Process Management and Industrial Automation were down slightly. Reported earnings per share of $0.57 declined 60 percent, including separation costs of ($0.09) related to the strategic portfolio repositioning and the impact of a divestiture gain of $0.77 in the prior year. Operating cash flow increased 101 percent, due to improved working capital performance. The Company remains on track to generate $3+ billion of operating cash flow for fiscal 2016, excluding the impact of separation costs related to the portfolio repositioning. Reported operating cash flow will be approximately $2.8 billion.
“While pressure from global economic conditions continued, our second quarter results reflected varying levels of incremental improvement in our businesses,” said Chairman and Chief Executive Officer David N. Farr. “The restructuring efforts we initiated last February are generating the margin improvement we expected, while at the same time trailing three-month underlying order rates improved sequentially throughout the quarter. Conditions in our oil and gas and industrial served markets will remain challenging, but order trends in our other markets are expected to strengthen in the second half of the fiscal year. As a result, the Company continues to expect better second half performance in terms of both profitability and underlying sales as our restructuring actions take hold.”
“In April, we took another important step in our strategic portfolio repositioning plan by filing the Vertiv Form 10 for the Network Power spinoff,” Farr continued. “While working diligently on the spin process, we continue to discuss the potential sale of the Network Power business with interested parties. In addition, the sale process for the motors and drives and power generation businesses is well underway. There is still much work to be done to complete our repositioning strategy, but we remain committed to substantially completing these actions by the end of the fiscal year in order to position both Emerson and Vertiv for growth and to drive shareholder value.”