Bolstered by strong growth in its Process Management business unit, Emerson Electric Co. today reported that sales in its fourth fiscal quarter climbed to $4.6 billion, up 13% compared with the like period last year.
Thanks to ongoing restructuring-related cost-cutting, Emerson reported an 18% increase in fourth quarter net earnings, rising to $419 million.
"2005 was an outstanding year," David N. Farr, Emerson chairman and CEO told analysts in a conference call. "We had a record year on all fronts. We leave 2005 with record order backlog in the fourth quarter up 15%."
Sales in Emerson's key Process Management business unit were up 14.1% for the quarter ended September 30 to $1.2 billion. Process Management's earnings of $203 million were up 21.6% compared with last year's fourth quarter.
The Process Management unit's business for the quarter was strongest in Asia where sales grew 24%. Quarterly sales were up 2% in the U.S. and 4% in Europe.
Farr said the overall strong Process Management results were due in part to the completion of several very large projects in the fourth quarter.
For the year, Emerson reported net sales of $17.3 billion, up 11% compared to fiscal 2004 results. 2005 net earnings of $1.4 billion were up 13% over the previous fiscal year.
Emerson's Process Management business for the year reported sales of $4.2 billion, up 13% compared with the prior year. For the year, the Process Management business saw sales grow 22% in Asia, 29% in Canada and 13% in Latin America.
Process Management was one of three Emerson business units that saw double-digit sales growth rates for the year. Besides Process Management's 13% growth for 2005, the company's Industrial Automation business saw 10% sales growth, and its Network Power unit experienced a 23% increase in sales. Emerson's Climate Technologies business grew 2%, while its Appliance and Tools unit grew sales by 7%.
Emerson becomes just the latest automation technology vendor to report recent strong financial results. ABB Group recently reported that its net earnings for the quarter ended September 30 doubled to $188 million. Schneider Electric reported a 14.3% increase in sales for its third quarter ended Sept. 30. And Siemens AG, which is expected to announce its fourth quarter results on November 10, reported third-quarter profit up 6% on an 8% increase in sales.
Emerson's Farr predicted that the company's strong momentum will continue into fiscal 2006, particularly in the first half of the year. "Read my lips: I'm very positive about 2006," said Farr.
Specifically, Emerson forecast first-quarter, 2006 sales growth of between 8% and 10% and earnings-per-share growth in the range of 12%-to-15%. For the Process Management business, Farr predicted continued strong demand for the company's PlantWeb product line. He said key manufacturing markets for the unit in 2006 will be oil and gas, power and chemicals.
Geographically, Process Management is expected to do well in Latin America, China, Canada, Eastern Europe and Russia, Farr said.
Based on its strong results, Emerson will continue its selective acquisition strategy in 2006, Farr said. The company, in 2005, made about $500 million worth of acquisitions. Farr said the value of 2006 acquisitions could approach $1 billion, although he said it more likely will be in the range of between $500 million and $550 million.