News posted by www.newsinfoline.com
U.S. conglomerate Emerson Electric Co reported lower-than-expected quarterly profit on Tuesday amid rising expenses, and said U.S. and European economies may not come back as strongly as in past economic cycles.The maker of industrial automation systems and technology for energy and chemical plants said industrial markets have bottomed and started to turn around, and it raised its full-year forecast. Orders in its biggest segment, process management, turned higher during the quarter.But Chief Executive David Farr said: "We remain concerned about the sustainability of the U.S. and European economies compared to historical recovery cycles." Farr added he felt confident about Emerson's improved outlook.Emerson shares, which have outperformed the broader stock market since the end of the previous earnings season, were down 6.3 percent at $50.24 in early trading on the New York Stock Exchange, giving up all of their April gains. The broader market was down 2 percent."The downside came from compensation costs that were driven by the rebound in the stock price," said analyst Matt Collins at Edward Jones in St. Louis, who has a "buy" rating on Emerson shares. "Operationally, the quarter looked solid."Order trends improved, rising between 10 percent and 15 percent over trailing three months, the company said in a regulatory filing. The strongest order growth was in the climate business, while higher demand from oil, gas and nuclear markets supported the process management segment."If you had just the order numbers, the stock would have reacted favorably," Collins said. CEO Farr's comment about the recovery was also weighing on the stock, since Farr is "known for calling it as he sees it and has a good pulse on the global economy."Emerson had beat forecasts in the prior two quarters and many of its industrial peers had beaten estimates this quarter, so expectations were high, Collins said.PROFIT MISSNet earnings rose 9 percent to $405 million, or 53 cents per share, for the fiscal second quarter ended March 31, compared with $373 million, or 49 cents per share, a year earlier.Earnings from continuing operations were 54 cents a share, missing Wall Street estimates by 1 cent, according to Thomson Reuters I/B/E/S.Sales rose 1 percent to $5.14 billion, below Wall Street forecasts for $5.21 billion. China's stimulus helped drive a 24-percent sales gain in Emerson's early-cycle segment that makes heating and cooling technology.Emerson generates about a third of its sales from emerging markets like India and China, a higher proportion than all of its large industrial peers except 3M Co, according to a ranking by JP Morgan analysts.Sales of later-cycle industrial automation systems such as motors and power transmission products fell 10 percent to $867 million, and segment operating profits were down. Profit and revenue were also down in the process management segment, but they rose in other Emerson business units.St. Louis based Emerson, which also makes tools and uninterruptible power systems, said it expects full-year earnings per share between $2.40 and $2.55, on sales of $21.3 billion to $21.9 billion. In February, Emerson had forecast 2010 earnings of $2.20 to $2.40.Analysts have been looking for earnings of $2.43 a share on sales of $21.5 billion.Last month, Britain's Chloride Group Plc rejected a $1.1 billion approach from Emerson, saying the offer -- along with an earlier 2008 bid -- undervalued the company. Emerson has argued that a combination with Chloride makes strategic sense.(Reporting by Nick Zieminski; Editing by Derek Caney, Gerald E. McCormick, Dave Zimmerman)
News posted by www.newsinfoline.com
Click here to read more news from www.newsinfoline.com
Please follow our blogs
newsinfolinephotogallery
prabugallery
newsinfolinephotogallery1
photogallery1
No comments:
Post a Comment