Diversified global technology company Emerson Electric Co. (EMR) on Tuesday reported lower profit for the fourth quarter, reflecting higher rationalization expense besides 27% drop in net sales. Per share earnings fell from last year, but topped the Street view. Further, the company hiked its quarterly cash dividend by 1.5%, and said it is "well positioned for economic recovery" for which the shape and speed remains unknown.
The St. Louis, Missouri-based company's fourth-quarter net income was $506 million, down from $688 million in the year ago quarter. Per share earnings fell 24% to $0.67 from $0.88 in the same quarter of last year.
On average, 18 analysts polled by Thomson Reuters expected the company to post earnings of $0.60 per share. Analysts' estimates typically exclude special items.
The company noted that the rationalization expense, which was $62 million higher in the quarter versus the same period last year, negatively impacted the earnings per share comparison by $0.06 per share. This was essentially offset by lower tax expense as expected in the fourth quarter that had a positive impact of $0.07 on the earnings per share comparison.
Income from continuing operations dropped 27% to $506 million from $690 million a year earlier.
Quarterly net sales totaled $5.32 billion, a decline of 21%, compared to the previous year's net sales of $6.69 billion. Thirteen Wall Street analysts had a consensus revenue estimate of $5.30 billion for the quarter.
Underlying sales in the quarter fell 20%, which excludes a 2% unfavorable impact from currency exchange rates and a 1% positive impact from acquisitions.
David Farr, Chairman, Chief Executive Officer and President of Emerson, said, "Our fourth quarter results signify improving revenue trends as well as the positive benefits of our aggressive structural repositioning for greater efficiency."
Further, the company said though it expects weakness to continue in the near-term, it is benefiting from its aggressive investments in new technologies to speed new product introductions, and in emerging markets, which currently represent 32% of total revenue.
The company's Process Management segment fetched fourth-quarter sales of $1.65 billion, down 13% from $1.89 billion last year. This included a 13% underlying sales decline, a 3% unfavorable impact from currency translation and a 3% favorable impact from acquisitions. Segment earnings dropped to $286 million from $416 million reported a year earlier.
Fourth-quarter sales at the Industrial Automation division fell 36% to $822 million from the previous year's sales of $1.28 billion. Underlying sales decreased by 37%, the System Plast and Trident Power acquisitions added 3% and currency subtracted 2%. Segment earnings dived to $63 million from $199 million posted in the prior-year quarter.
Network Power generated quarterly net sales of $1.34 billion, a decline of 22% from the prior-year's sales of $1.71 billion, with underlying sales down 20% and currency and acquisitions subtracting 1% each. Segment earnings dropped to $178 million from $215 million a year ago.
Emerson's Climate Technologies witnessed sales decline of 10% that totaled $913 million, compared to $1.01 billion in the corresponding quarter of the previous year. Underlying sales declined 10%, currency subtracted 2% and acquisitions added 2%. Segment earnings totaled $147 million, higher than the previous year's earnings of $138 million.
Quarterly sales at the company's Appliance and Tools unit amounted to $760 million, a decline of 22%, compared to $975 million in the fourth quarter of 2008, with consumer related product demand continuing to show signs of stabilization. Segment earnings slightly declined to $117 million from $118 million posted in the year-earlier quarter.
For the fiscal year 2009, net income totaled $1.72 billion or $2.27 per share, compared to $2.41 billion or $3.06 per share in the prior-year. Analysts expected earnings of $2.20 per share for fiscal 2009.
Annual net sales for the year ended September 30, 2009 were $20.9 billion, down 16% from $24.8 billion reported in the previous year. Sixteen Wall Street analysts had a consensus revenue estimate of $21.09 billion for the full year.
Looking forward to the first quarter, the company projects underlying sales to be down 17% - 20%. For fiscal 2010, underlying sales are expected to be down 5% - 7%. Operating profit margin for the full year is anticipated to be flat to slightly down.
The decisive steps it has taken to reposition its operations for greater efficiency, as well as its investment in strategic acquisitions, will contribute significantly to the company's growth when the economic cycle improves, the company added.
The company, on November 2, increased its quarterly cash dividend to $0.335 from $0.33 per share, an increase of 1.5%. The new dividend would be payable on December 10, 2009 to shareholders of record on November 13, 2009.
Farr said, "Emerson took rapid steps to adjust our operations to the changing market conditions, and our free cash flow performance and balance sheet are testaments to this fact. Even with the significant challenges the company faced this year, we have met the challenge by doing what we do best: innovating and moving forward with opportunities to strengthen our business platforms."
Among Emerson's rivals, ABB Ltd. (ABB) posted third-quarter net income of $1.03 billion or $0.45 per share, up from $927 million or $0.40 per share in the prior-year quarter, reflecting significant net gain on provision adjustments. Revenues for the quarter fell 10% to $7.91 billion from $8.79 billion in the year-ago quarter.
Emerson closed Monday's regular trading session at $38.15. In the past 52 weeks, the stock has been trading between $24.39 and $41.65.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.