UPDATE: Emerson Lowers Fiscal Year EPS Outlook As Sales Weaken
April 07 2009 - 12:35PM
Dow Jones News
Emerson Electric Co. (EMR) lowered its full-year earnings
forecast, acknowledging that its diversified mix of businesses and
markets is providing little cover from the weak economic
conditions.
Emerson, like other industrial companies, has been bracing for
falling demand by throttling down its production, reducing the
number of its employees and cutting expenses. But the company said
the downturn has been wider and more severe than forecast earlier
this year.
"We have seen this weakness broadly across our five business
segments and the end-markets we serve, including residential,
nonresidential and capital businesses," said Chief Executive and
President David N. Farr. The company makes industrial-automation
equipment, power network gear, appliance parts and systems and
components for heating and cooling equipment.
The tough business conditions affecting Emerson as well as other
diversified manufacturers including Danaher Corp. (DHR) and Parker
Hannifin Corp. (PH), which compete in some of the same markets.
St. Louis-based Emerson now sees full-year earnings of $2.40 to
$2.60 a share, down from its February forecast of $2.70 to $2.95 a
share. The company also expects net sales for the fiscal year to
fall 13% to 15% to $21 billion to $21.7 billion. Sales are expected
to be hurt by about 5% because of currency translations, but
boosted by 1% because of acquisitions.
Wall Street analysts polled by Thomson Reuters had expected the
company to earn $2.47 a share this year on sales of $22.1
billion.
Net sales for the fiscal second quarter through the fiscal
fourth quarter, which ends in September, are expected to be down
16% to 19%. Emerson anticipates expects restructuring expenses of
about $200 million to $250 million. The company anticipates
spending about $1 billion on acquisitions. Free cash flow is
projected at $2.5 billion.
Emerson's shares were recently up $1.13, or 3.7%, at $32.02.
Emerson's stock has lost one-third of its value from September.
(John Kell contributed to this report.)
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com