Emerson Electric Co.'s (EMR) fiscal third-quarter profit dropped
37% as weak orders and restructuring costs hit its bottom line as
results fell short of analysts' expectations.
The maker of industrial-automation equipment, power systems and
heating and cooling gear also lowered its fiscal-year estimates for
a third time as it still doesn't expect to see "any significant
recovery" until late 2010.
Emerson now anticipates earnings for the current year of $2.20
to $2.30 a share, with sales falling to $20.8 billion to $21.1
billion. The company had been projecting income of $2.40 to $2.60
and sales of $21 billion to $21.7 billion.
The company also is targeting to reduce inventory, excluding
acquisitions, by another $150 to $200 million in this quarter.
Emerson has been hurt as demand in Europe and North America
picks up more slowly than expected. It has aggressively reduced its
inventories and its work force over the past several months.
For the quarter ended June 30, Emerson's profit fell to $387
million, or 51 cents a share, from $612 million, or 78 cents a
share, a year earlier. The latest results included 5 cents in
restructuring charges.
Net sales fell 22% to $5.09 billion, but were essentially flat
with the previous quarter, "an encouraging sign of stabilization,"
but below expectations.
Analysts forecasted earnings, excluding items, of 57 cents a
share on revenue of $5.34 billion
Gross margin fell to 36.1% from 36.7%, reflecting operations
running below capacity due to lower sales volume and inventory
liquidation.
Results weakened across the company, with Emerson's biggest unit
- process management - reporting a 36% profit drop and 13% sales
decline.
Shares of Emerson closed at $36.42 and weren't active
premarket.
-By Mike Barris, Dow Jones Newswires; 212-416-2330;
mike.barris@dowjones.com