Emerson Q4 Results Top Estimates, But Provides Weak 2014 EPS Outlook

(RTTNews) - Diversified global technology company Emerson Electric Co. (EMR) reported Tuesday a profit for the fourth quarter that nearly tripled from last year, which was weighed down by a hefty goodwill impairment. Adjusted earnings per share and quarterly revenues topped analysts' expectations. The company also provided earnings forecast for the full-year 2014, below Street view, while boosting quarterly cash dividend by two cents.

"The global macroeconomic climate remained under pressure and difficult to predict throughout 2013. I am very pleased by how we executed in this environment, achieving a number of record performance measures and important milestones despite the slow pace of growth in our markets, particularly in the second half of the year" Chairman and CEO David Farr said in a statement.

St. Louis, Missouri-based Emerson reported net earnings of $795 million or $1.10 per share for the fourth quarter, sharply higher than $282 million or $0.39 per share in the prior-year quarter.

Results for the latest quarter include an after-tax goodwill impairment of $0.08 per share, while the year-ago quarter included $0.72 per share of the same charges.

Excluding items, adjusted earnings for the quarter was $1.18 per share, compared to $1.11 per share last year. On average, 26 analysts polled by Thomson Reuters expected the company to report earnings of $1.11 per share for the fourth quarter. Analysts' estimate typically exclude special items.

Net sales for the quarter increased 2 percent to $6.81 billion from $6.70 billion in the same quarter last year, and topped twenty-three Wall Street analysts' consensus estimate of $6.76 billion.

Underlying sales grew 1 percent, with the U.S. down 1 percent, while Asia sales grew 4 percent, and Europe sales increased 1 percent. Emerging markets continued to outperform mature markets, with 5 percent growth driven by China and Mexico.

Process management sales for the quarter grew 5 percent to $2.51 billion, while sales for industrial automation were $1.26 billion, down 3 percent from the previous year, and network power sales declined 3 percent to $1.71 billion from the year-ago quarter.

Climate technologies sales totaled $1.02 billion, up 6 percent from last year's $961 million, and sales for commercial & residential solutions grew 4 percent to $483 million from last year.

On Monday, the company also raised its quarterly cash dividend by two cents to $0.43 per share of common stock, payable on December 10 to stockholders of record as of November 15, 2013.

For fiscal 2013, net earnings grew to $2.0 billion or $2.76 per share from $1.97 billion or $2.67 per share in the prior year. Excluding impairments, adjusted earnings per share was $3.54, compared to $3.39 in the prior year. Analysts expected earnings of $3.48 per share.

Net sales for the year edged up 1 percent to $24.67 billion from $24.41 billion posted last year, while analysts were looking for $24.61 billion.

Looking ahead to fiscal 2014, Emerson expects adjusted earnings to grow in the 4 to 7 percent to a range of $3.68 to $3.80 per share, on projected underlying sales growth in a range of 3 to 5 percent. Street is looking for full-year 2014 earnings of $3.89 per share on annual revenues of $25.21 billion.

"We are planning for a modestly better operating environment next year, but still slow relative to previous recovery cycles. Improving conditions in Europe and China, along with continued strength in energy and chemical end markets, should provide support into 2014," Farr added.

EMR closed Monday's regular trading session at $67.37, down $0.09 on a volume of 2.32 million shares.