Process automation and instrumentation giant Emerson Electric Co. hit a financial milestone with revenues in its recently completed fiscal third quarter topping the $5 billion mark -- a first for the St. Louis-based company.
Pre-tax earnings in the quarter ended June 30 were $714 million, a 19% increase over the like period last year, on sales of $5.2 billion, a 17% spike from 2005's corresponding period. As was the case in the prior quarter, the company's Process Management group, which serves the oil and gas and chemicals industries with its Delta V control technology and PlantWeb field-based architecture, was the company's top-performing business segment, contributing earnings of $221 million on sales of $1.2 billion.
The Industrial Automation group, which markets mechanical, electrical, and ultrasonic technologies, delivered earnings of $142 million on revenues of $968 million. Network Power, meanwhile, posted earnings of $139 million on sales of $1.1 billion in the quarter.
Emerson's upbeat financial performance follows equally strong quarterly results announced last week by competitors ABB, Siemens, and Rockwell. Meanwhile, Schneider Electric recently disclosed net earnings of €604 million for the first half ended June 30, up 46% from the like period last year, on sales of €6.5 billion, itself a 22% jump from the first half of 2005.
The robust results prompted Schneider Electric executives to revise upwards the French automation company's outlook for the year. The company now expects sales to grow 9% and operating income to rise 25% over calendar 2005 results.
Similarly, Emerson Chairman and CEO David Farr told the financial community during a briefing that his company will continue to grow despite an expected economic slow down. Emerson, he said, has not seen evidence that its customers are wavering on capital expenditures. Continued strength in the company's Process Management and Network Power groups will generate positive year-end results, he reassured analysts.
"I've always been reasonably conservative, but I feel good about what's happening in the fourth quarter and first part of next year," Farr commented during the briefing.
The company made a few strategic acquisitions this year, including Bristol Babcock, a maker of SCADA solutions, which was folded into Emerson's Process Management group. Emerson's infrastructure build-out in the fast-growing Asian and India and Latin America markets is also keeping the company busy, Farr noted.
And Canada, although showing flat sales growth at present, is poised for growth, due to new oil exploration, Farr said. For example, in June, Emerson Process Management signed a contract with Canadian Natural Resources Ltd. to automate the first phase of its $9.4 billion Horizon Oil Sands Project.
The tar sands of Alberta have become a draw for energy exploration as the price of a barrel of oil remains stuck in the mid-$70 range. Tar sands can be mined to extract oil-like bitumen, which, once refined, has the potential to complement oil as an energy source for North American industry.
As a result, "there's plenty of money to automate and improve capacity, reliability, and capital utilization in the oil and gas exploration, distribution, and refining businesses," an Emerson spokesperson said.
And there's plenty of competition in the area as well. But with a strong team, a solid business strategy, and investments in its own production capabilities, Emerson executives say they are not worried. "It's always a tough marketplace," Farr said. "But I'm not too afraid of [the competition]."