ST. LOUIS – Emerson announced net sales in the third quarter ended June 30, 2016 were down 7 percent, with underlying sales down 5 percent excluding unfavorable currency translation and an impact from a divestiture, net of acquisitions of 1 percent each. The Company’s third quarter results reflect the continuation of challenging demand conditions in our key served markets in addition to an environment of global economic uncertainty. Sales were down in all segments except Network Power, which was up 8 percent on the strength of both data center and telecommunications infrastructure spending. Emerson underlying sales were negative in all regions, except Europe which was flat. Our expectation coming into the quarter for improvement in our core North American automation businesses did not materialize as anticipated.
Despite lower than expected sales in the quarter, EBIT margin increased 20 basis points versus the prior year driven by the benefits from restructuring actions and solid margin improvement in the Network Power, Commercial & Residential Solutions and Climate Technologies segments. Pretax earnings margin was flat at 14.5 percent. Total segment margin was up 50 basis points to 16.0 percent. Adjusted earnings per share of $0.80, excluding separation costs of ($0.06) decreased 5 percent versus the prior year. Reported earnings per share were $0.74. Operating cash flow of $718 million increased 44 percent versus the prior year.
“Our businesses executed in a quarter characterized by unpredictable economic conditions, especially in the North American oil and gas markets,” said Chairman and Chief Executive Officer David N. Farr. “Operational execution as well as the benefits from our restructuring activities resulted in improved margins in three of our five segments in the quarter, two of which were achieved despite lower volumes. And while the overall results were below expectations, I am extremely proud of our employees across all of our businesses who are driving Emerson forward and undertaking significant business repositioning actions in this difficult environment.”
On August 2, “we announced agreements for the sales of our Network Power, Leroy-Somer and Control Techniques businesses for a combined value of $5.2 billion,” Farr continued. “These agreements represent a significant step forward in the overall portfolio repositioning strategy we announced last year in June. Management and the Board will continue to focus on where best to allocate the proceeds to bolster our presence within our core Automation Solutions and Commercial & Residential Solutions business platforms in order to drive growth, profitability and shareholder value.”
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