Emerson reported net sales for the third quarter down 22% on the same period last year at $5.1bn, but flat compared with the previous quarter, suggesting, according to its press release, that conditions were stabilizing, albeit at a level lower than had been expected just a few months ago. Earnings per share were down 38%, and operating margin declined from 16.6% to 14.7%, but was up by 60 basis points compared with the previous quarter.
Of the company's five divisions, Process Management saw the smallest sales decline at 13% compared with 36% for Industrial Automation, 22% for Network Power, 21% for Climate Technologies and 23% for Appliances and Tools.
Still Setting the Pace
Process Management underlying sales from international markets were down just 4%, whereas sales in the United States declined 18%. As a result, the much vaunted Emerson Process Management margin, against which all other process automation vendors tend to be judged, was down from 20% to 14.8%. That compares, however, with ABB, which last month reported the margin for its Process Automation division down from 11.8% to 9.3% in the second quarter, suggesting that Emerson is still setting the pace.
Meanwhile, the statement in the release that "While the late-cycle nature of the business will put pressure on 2010 revenues, the long-term fundamentals of the served markets remain very good," suggests that Process Management expects no significant improvement in trading conditions until at least the end of 2010. However it still argues that its "End markets such as power, water and wastewater treatment provide near-term opportunities to continue to expand our market leadership." And it stressed, as did Duncan Schleiss when he talked to INSIDER last month that investment in R&D has been maintained through the cycle.