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Emerson Electric: Emerson Reports Full Year And Fourth Quarter 2015 Results

The following excerpt is from the company's SEC filing.

Net sales of $22.3 billion decreased 9 percent, with underlying sales down 2 percent

Reported earnings per share increased 32 percent to $3.99. Adjusted earnings per share decreased 15 percent to $3.17, excluding $0.82 for divestiture gains and other items

Over the past twelve months $3.8 billion has been returned to shareholders through dividends and share repurchase

Completed 59th consecutive year of increased dividends; targeting nominal dividend increase for the first quarter 2016

ST. LOUIS, November 3, 2015 – Emerson (NYSE: EMR) today announced that net sales in 2015 declined 9 per cent as the Company faced difficult economic conditions for the majority of the fiscal year. Underlying sales declined 2 percent excluding an unfavorable currency translation impact of 5 percent and an impact from divestitures of 2 percent. Sales were negatively impacted by significant headwinds from lower oil prices, a global slowdown in industrial capital spending, weakening demand in emerging markets and the strength of the U.S. dollar. Global demand was mixed with underlying sales in Middle East/Africa up 3 percent, and Europe flat, while North America was down 2 percent, Asia down 5 percent and Latin America down 9 percent. Within the business segments, Commercial & Residential Solutions experienced modest underlying growth and Climate Technologies was flat, while the remaining segments were down.

Profitability declined, reflecting volume deleverage, unfavorable business and product mix, the impact of the stronger U.S. dollar on operations and significantly increased restructuring expense. Reported earnings per share for the fiscal year were $3.99, an increase of 32 percent. Adjusted earnings per share were $3.17, a decrease of 15 percent, excluding gains of $0.90 from the divestitures of the Power Transmission Solutions and InterMetro businesses, expense of ($0.08) for taxes and costs related to the Network Power spinoff, and a ($0.72) impairment loss in the prior year. In response to weakening global demand restructuring activities were significantly accelerated during the fourth quarter. Full-year restructuring expense totaled $221 million, including $211 million reported in other deductions. Total program spending exceeded expectations from the August conference call by approximately $40 million (~$0.04 per share). Operating cash flow declined 32 percent, primarily due to lower underlying operating results, taxes paid on the divestiture gains and a slight increase in operating working capital.

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“Fiscal 2015 was a challenging year as we faced extended downward pressure on sales and earnings from strong economic headwinds that affected results across our business,” said Chairman and Chief Executive Officer David N. Farr. “While we continue to take important steps to balance our assets and manage costs, underlying order rates remain slow in our key served markets as a result of reduced levels of capital spending. We expect these difficult market conditions through at least the first half of fiscal 2016. Our focus remains on efficiently executing our portfolio repositioning. In 2015 we successfully divested our Power Transmission Solutions and InterMetro businesses to strategic buyers achieving a good return for our shareholders. In 2016, our repositioning efforts will be focused on the successful spinoff of Network Power and the potential sale of our Motors and Drives and Power Generation businesses as well as increased activity in the evaluation and acquisition of key strategic assets.”

"The Company continues to execute on the things within our control," continued Farr. "Aside from the portfolio actions, the restructuring programs initiated in February 2015 were significantly accelerated in the second half of the year in response to the declining global business landscape. The extraordinary efforts undertaken by our teams to right-size the global cost structure will provide approximately $250 million of benefit for the Company in 2016 and will help protect our profitability and cash flow in a continued environment of negative underlying sales."

Fourth Quarter Results

Net sales in the fourth quarter were down 15 percent. Underlying sales declined 7 percent excluding unfavorable currency translation of 6 percent and a 2 percent impact from the divestiture of the Power Transmission Solutions business. Underlying sales decreased in all segments except Commercial & Residential Solutions, which was up 3 percent. Weak economic and demand conditions in key markets were evidenced by declines in all geographic regions except Middle East/Africa, which was up 2 percent.

Reported earnings per share of $0.98 increased 69 percent. Adjusted earnings per share decreased 29 percent to $0.93, excluding a $0.13 gain on divestitures, expenses of ($0.08) for costs related to the spinoff of Network Power, and a ($0.72) impairment loss in the prior year. Gross profit declined 170 basis points to 40.7 percent as a result of volume deleverage and unfavorable business and product mix. Restructuring expenses were significantly accelerated in the quarter to $128 million...