Defying the economic malaise in its home country, St. Louis-based Emerson Electric. Co. this week reported another quarter of double-digit growth, buoyed by strong momentum in its Process Management, Industrial Automation, and Network Power segments.

For its third quarter, ended June 30, Emerson reported earnings from continuing operations of $647 million (€418 million), or $0.82 (€0.53) per share, up 13% over the prior year’s $573 million (€370.5  million). Net sales reached $6.6 billion (€4.3 billion), a 14% improvement over last year’s $5.8 billion (€3.75 billion).
Stripped of the 5% boost from currency rates and the 2% from acquisitions, the company notched underlying sales growth of 7%. International sales led the charge, increasing 10% on an underlying basis, with Asia up 16%, the Middle East/Africa up 15%, and Latin America up 16%. Underlying sales in the United States and Europe increased 4% and 3%, respectively.

Emerson said it plans to accelerate its investment in next-generation technologies, specifically in wireless and its PlantWeb control architecture, both of which fall under the Process Management group.

Emerson is also investing in the infrastructure necessary to expand the global reach of its solutions and services business as it moves towards 2010, the company said.

“Yes, there are shifting economic winds, but we are adjusting the business and the mix of the company,” said David Farr, Emerson’s chairman, CEO, and president, on a conference call with analysts Tuesday. “We are divesting businesses that don’t fit the strategy anymore, and [making] acquisitions where it makes sense.”

During the third quarter, the company entered into a definitive agreement to sell its European appliance motor and pump business, and recorded a related $36 million (€23.3 million) impairment charge.

In addition, the Appliance and Tools business, whose sales were down 1% this quarter to $998 million (€645 million), is in transition mode, as the company considers selling the appliance control portion of that business unit.
Meanwhile, with $827 million (€534.5 million) of operating cash flow in the quarter, the company is well-positioned to continue exploring acquisition opportunities.

Among Emerson’s business segments, the Process Management group was the biggest money-maker in the quarter, contributing earnings of $346 million (€223.6 million) on sales of $1.7 billion (€1.1 billion) —a sales increase of 18% year over year. Global demand was strong for the unit, which showed double-digit growth in every region except Europe. Citing a growing order backlog, Farr said he feels Process Management will remain sturdy through 2009, regardless of the economy.

“The global industry is short of resources, be it people, materials…So you’ll see extended cycles because you can only do so much at one time,” Farr said. “We have good visibility for at least 12 months, and as we move into 2009 I feel good about it…unless the world dramatically changes.”

The second biggest revenue engine in Emerson’s third quarter was the Network Power group, which generated $1.6 billion (€1 billion) in sales, an underlying increase of 10% year over year. The Industrial Automation group’s underlying sales were up 8% to $1.3 billion (€0.84 billion), while the Climate Technologies business managed only 1% growth in underlying sales, to $1.1 billion (€0.7 billion).

In the wake of the solid quarterly numbers, Emerson projected a healthy annual outlook. The company expects operating profit margin for the year to be in the range of 16.2% to 16.4%, which would be a strong increase and is expected to be driven by new products, aggressive restructuring, and emerging market growth. In addition, Emerson now expects full year earning per share from continuing operations to come in slightly higher than previous guidance -- in the range of $3.05 to $3.10 (€1.97 to €2) instead of $3.00 to $3.10 (€1.94 to €2).

Sales are expected to increase 11% to 13% over fiscal year 2007 sales of $22.1 billion (€14.3 billion), excluding discontinued operations. The company also expects return on total capital (ROTC) of 21% for fiscal year 2008.