Emerson Electric Company (EMR) reported second quarter of 2010 earnings per share from continuing operations of 54 cents, falling just short of the Zacks Consensus Estimate of 55 cents.
Net revenues for the second quarter ended Mar 31, 2010 were $5.1 billion, an increase of 1% from the same quarter last year. For the quarter, underlying sales declined 6%, which excludes growth from acquisitions of 4% and favorable currency exchange rates of 3%. The underlying sales decline slowed in the U.S., which was down 3% percent. Although the rate of decline has stagnated, underlying sales in Europe were down 18%. Sales in Asia continued to improve and were up 5%.
Segment Details
Process Management sales were down 5% in the quarter, including a 13% decline in underlying sales and a favorable 4% impact each from currency and acquisitions. Segment margin declined slightly to 16.9%, compared with the prior year margin of 17.1%. During the quarter, Process Management entered into a five-year global framework agreement with Shell to serve as a main automation contractor on future capital projects.
Sales in the Industrial Automation segment declined 10% in the second quarter, including an underlying sales decline of 16% and a 3% favorable impact each from currency and acquisitions. The electrical drives business was strong and growth resumed in the fluid power and electrical distribution businesses.
Sales in the Network Power segment increased 4% in the second quarter, which included an underlying sales decline of 6%, a 7% favorable impact from the Avocent acquisition, and a positive currency impact of 3%.
Climate Technologies sales strengthened in the second quarter and were up 24%. Underlying sales were up 19%, acquisitions added 3% and currency added 2%. Asia remained very strong, with sales up 67% compared with the prior year quarter, driven primarily by positive effects from government stimulus programs in China.
Appliance and Tools sales moved positive and were up 4% in the quarter, which included a 2% underlying sales increase and a 1% favorable impact each from currency translation and acquisitions.
Guidance
Emerson expects full year earnings per share in the range of $2.40 to $2.55. This estimate is based on anticipated underlying sales that are flat to down 3%.
We currently have a Neutral recommendation on EMR.
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