The year is starting off on a good note for Emerson Electric Co. and ABB Inc., two industrial automation vendors that recently announced quarterly earnings.
St. Louis-based Emerson, which reported its fiscal second-quarter results yesterday, attributed a 25% quarter-over-quarter jump in net earnings to a strong foundation put in place by prior restructuring activities. ABB, on the other hand, which released its first-quarter earnings last week, showed strong top-line growth and a 30% increase in earnings before interest and taxes.
The upbeat financials follow similar positive results recorded by Rockwell Automation and Siemens' automation business unit.
Emerson's Process Management unit was the top revenue generator within the company, as it was in the previous quarter, contributing $1.1 billion of the company's total $4.9 billion in sales for the period ended March 31, 2006. Major wins in the quarter included a contract with the U.S. unit of BP plc to provide control systems for three refineries and a seven-year agreement with Suncor to automate its North American facilities.
Another Emerson business unit, Industrial Automation, generated $931 million in sales, up 17% from $799 million in last year's second quarter. It, too, profited from a swell of new market activity in oil, gas, mining, and metals markets, according to a company statement. The company's Network Power and Appliance and Tools businesses each contributed $1 billion in revenue, while Climate Technologies brought in $852 million.
Emerson has made targeted acquisitions to stay ahead of the demand across its diverse business portfolio. Last week, for instance, the company finalized a deal with Artesyn Technologies that Emerson officials said will add another $200 million in revenue. The business will be integrated into Emerson's Network Power division within the next 18 to 24 months, and is expected to be accretive to earnings per share by 2007, David Farr, Emerson's chairman, CEO, and president, told financial analysts in a briefing yesterday.
"The operating people are doing a superb job," Farr said. "We've been going through major repositioning of core businesses over the last several years ... we are globalizing, making investments in engineering ... and it's paying off.
"You're not going to see every Emerson business go up," he told analysts. "But there is a master plan." In the meantime, "2006 is shaping up to be a very nice year," he said.
ABB, meanwhile, posted net income of $204 million in its first quarter ended March 31, up marginally from the $199 million reported in the same period last year. However, the company, which kicked off its own restructuring initiative in January -- subdividing two core divisions into five independent businesses -- has strengthened its position in fast-growing markets, said Fred Kindle, ABB's president and CEO, in a statement.
Overall first-quarter revenues for ABB reached $5.4 billion, up slightly from the $5 billion recorded in the corresponding period last year, but off from the prior quarter, when ABB posted $6 billion in sales.
ABB has been contending with an asbestos lawsuit directed at two of its U.S. subsidiaries. To that end, it established a reorganization plan, effective April 21, which creates an independent trust to address present and future asbestos claims. These moves slightly diminished the company's net income.
"We delivered strong profitable growth in the first quarter thanks to our leading positions in fast-growing markets and our sharp focus on improving operational performance," said Kindle in a statement. "The accounting treatment of the asbestos shares dampened otherwise solid growth in net income."
Overall, growth in each new ABB division was solid. The Power Products, Power Systems, Automation Products, and Process Automation divisions all contributed slightly more than $1 billion in sales. The Robotics division pulled in revenue of $333 million for the quarter.
The Process Automation division registered $1.2 billion in revenues -- up 7% from the like period last year. ABB attributed the unit's growth to several large projects in the marine and minerals businesses and growth in service revenues.