Emerson 2004 Annual Report Download - page 22

20 Emerson 2004
OVERVIEW
Emerson achieved record sales and strong earnings in the fiscal year ended September 30, 2004. Sales
and earnings for all of the business segments increased over the prior year. The climate technologies and
appliance and tools businesses drove U.S. sales gains, while the process management, industrial automation
and network power businesses drove international sales growth. Strong growth in Asia, the United States and
Latin America, moderate gains in Europe and favorable exchange rates contributed to these results. Profit
margins improved primarily due to leverage on higher sales volume and benefits from previous rationalization
actions. The Company continues to manage commodity cost inflation pressure through sourcing initiatives,
productivity improvements and sales price. Emerson’s financial position remains strong and the Company
continues to generate substantial cash flow.
RESULTS OF OPERATIONS
Fiscal Year 2004 Compared With Fiscal Year 2003
(dollars in millions, except per share amounts) 2003 2004 Change
Sales $13,958) 15,615) 12%)
Gross profit $ 4,898) 5,566) 14%)
Percent of sales 35.1%) 35.6%)
SG&A $ 2,935) 3,281)
Percent of sales 21.0%) 21.0%)
Other deductions, net $ 318) 223)
Interest expense, net $ 231) 210)
Pretax earnings $ 1,414) 1,852) 31%)
Earnings from continuing operations $ 1,013) 1,257) 24%)
Net earnings $ 1,089) 1,257) 15%)
Continuing operations – EPS $ 2.41) 2.98) 24%)
Net earnings – EPS $ 2.59) 2.98) 15%)
Net Sales
Net sales for fiscal 2004 were a record $15.6 billion, an increase of almost $1.7 billion, or 12 percent, over
net sales of $14.0 billion for fiscal 2003, with both U.S. and international sales contributing. The consolidated
results reflect improving markets and increases in all five business segments, with an underlying sales
(which exclude acquisitions, divestitures and currency) increase of 8 percent ($1,181 million) and an
approximate 4 percentage point ($488 million) favorable impact from the strengthening Euro and other
currencies. The underlying sales increase of 8 percent was driven by 8 percent growth in the United States
and a total international sales increase of 9 percent, which primarily reflects 20 percent growth in Asia and
4 percent growth in Europe. The Company estimates that the underlying growth reflects the net result of
an approximate 6 percentage point gain from volume and an approximate 3 percentage point impact from
market penetration gains, partially offset by an approximate 1 percentage point negative impact from lower
sales prices.
International Sales
International destination sales, including U.S. exports, increased 17 percent, to $7.4 billion in 2004,
representing 47 percent of the Company’s total sales. U.S. exports were up 5 percent compared to the prior
year, at $939 million. International subsidiary sales, including shipments to the United States, were $6.6 billion
in 2004, up 18 percent over 2003. Excluding the net 9 percent impact from acquisitions, divestitures, and
favorable currency translation, international subsidiary sales increased 9 percent compared to the prior year.
Underlying destination sales grew 20 percent in Asia during the year, particularly in China, while sales grew
9 percent in Latin America and 4 percent in Europe.
Emerson achieved record sales of
$15.6 billion in 2004. Sales for all
of the business segments increased
over the prior year.
Sales
99 04030201
$16
$8
$12
00
$4
(dollars in billions)