Emerson restructuring boosts profit slightly as initiatives continue
St. Louis, Mo. -- Mar. 31, 2003 -- "Our focus continues to be on delivering restructuring benefits, strengthening o...
St. Louis, Mo. — Mar. 31, 2003 — “Our focus continues to be on delivering restructuring benefits, strengthening our technology and product leadership positions and our investments in major market segments around the world, as well as driving capital efficiency improvements across our entire company,” said David N. Farr, Emerson’s chief executive officer, on the release of the company’s first quarter results of fiscal 2003, ended December 31, 2002
Emerson (formerly Emerson Electric Co.) achieved sales of $3.2 billion, earnings of $217 million, and diluted earnings per share of $0.52. First-quarter sales in fiscal 2002 were $3.3 billion with earnings of $255 million and diluted earnings per share of $0.61, excluding the non-cash accounting change related to the adoption of FAS 142 for goodwill during the quarter. Including the accounting change, for the first fiscal quarter of 2002 the company reported a net loss of $683 million, or $1.62 per share.
Consolidated operating profit for the quarter increased 1%, or $3.6 million, and the operating margin increased 30 basis points despite lower sales, reflecting the benefits of Emerson’s restructuring initiatives.
Excluding gains from divestitures, earnings per share for the quarter were up over the first quarter of 2002. First-quarter fiscal 2003 gains from divestitures were down $70 million, or $0.12 per share, from the first-quarter of 2002. Ongoing restructuring costs were $29 million, down from $53 million in the first quarter of 2002 but still slightly higher than historical levels given the continued weak global markets.
Farr added: “Despite the anticipated slowdown in activity in the fourth calendar quarter as many of our key customers were cautious relative to inventories and production, the benefits of our restructuring helped deliver improved margins. Restructuring costs continued during the quarter but are trending toward historical levels as we complete many of the actions initiated over a year ago.
“The heightened political uncertainty and sluggish economic recovery continue to inhibit worldwide capital spending and business investment across many of the industries Emerson serves. In this environment of slow market growth, we will continue to improve earnings and margins by driving companywide cost initiatives and delivering restructuring benefits.
Emerson Process Management continues to expand the engineering services, systems, and solutions that customers demand.
Emerson has been selected by MOL Plc, a leading oil and gas company in Europe, to supply its automation technology and engineering services for clean diesel oil production in Hungary. Emerson will serve as the main automation contractor for the project. This contract, valued at $10 million, marks further expansion of the PlantWeb digital plant architecture in Eastern Europe.
Sales for industrial automation fell 5% to $623 million, due to excess capacity and reduced capital expenditures across the sector. Segment revenues, however, have stabilized during the past few quarters, and orders moved into positive territory for the first time since January 2001.