Emerson adjusts outlook in report on Q1 results

Emerson Electric’s first quarter (of fiscal year 2012) ended Dec. 31, 2011, with net sales (and “underlying sales,” the company said) down 4%—as were U.S. sales. Total sales came to $5.3 billion.

What happened? The company blamed flooding in Thailand for $300 million of the sales shortfall, but said these sales were only delayed, not terminated. Emerson also blamed, “Investment deferrals by U.S. telecommunications carriers, global HVAC channel inventory destocking, residential construction weakness in the U.S. and China, and European economic uncertainty.”

According to a presentation that accompanied the company’s phone conference with analysts, Industrial Automation sales (both actual and “underlying”) rose 2%, with the United States flat and other regions up. “Demand for capital goods should remain stable across most end markets,” Emerson posted.

Sales in three of Emerson’s four other segments were down in the quarter.

A transcript of the conference call revealed that David Farr, chairman and CEO, took “guidance” for fiscal 2012 sales results down to an increase of 4% to 6%. Three months earlier, he had predicted 5% to 7% “underlying sales” growth.

Initial media reports said the company’s stock price was under pressure as a result. However, the Yahoo! Finance posting of day-by-day stock prices and found:

  • Emerson Electric stock did fall from a high of $53.78 in intraday trading on Feb. 6 to a close of $51.92 the next day, which was the day of the financial release.
  • The stock has since rebounded, closing out last week at $52.20.
  • Emerson’s closing price at Dec. 31, 2011, was $46.59. That’s a 12% gain in the same time that the S&P 500 average has tacked on 6.8%.

Separately, the company noted that Josh Bolten, who was White House chief of staff from 2006 to 2009 for President George W. Bush, was added to the company’s board of directors. He now serves as managing director of Rock Creek Advisors.

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