Emerson 2006 Annual Report Download - page 29

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
                 
      changechange
(dollarsinmillions) 2004 2005 2006 ‘04-‘05 ‘05-‘06
Sales $3,703 4,200  13% 
Earnings $ 476 671  41% 
Margin 12.9% 16.0% 
 Sales in the Process Management segment were
$4.9 billion in 2006, an increase of $675 million, or 16 percent,
over 2005, reecting higher volume and acquisitions. All of
the businesses, including measurement, valves and systems,
reported higher sales and earnings (dened as earnings before
interest and taxes for the business segments discussion) due to
worldwide growth in oil and gas and power projects, as well as
expansion in China. The increasing demand for energy is driving
capacity expansion and upgrades to existing facilities in the
energy sector. Underlying sales increased 13 percent, excluding
a 3 percent ($147 million) contribution from the Bristol, Tescom
and Mobrey acquisitions, driven by the strong market demand
and aided by approximately 2 percent from penetration gains
and price. The underlying sales increase reects growth in all
major geographic regions, including the United States
(15 percent), Asia (15 percent), Latin America (20 percent)
and Europe (6 percent), compared with the prior year. Earnings
increased 31 percent to $878 million from $671 million in the
prior year, primarily reecting higher sales volume, as well as
acquisitions. The margin increase was primarily due to leverage
on higher sales. Sales price increases and material cost contain-
ment were offset by higher wages.
 Sales in the Process Management segment were
$4.2 billion in 2005, up $497 million, or 13 percent, over 2004,
reecting stronger market demand for capital goods (including
process automation products and systems), penetration gains in
excess of 1 percent and acquisitions. Nearly all of the businesses
reported sales increases, with sales and earnings particularly
strong for the valves and measurement businesses due to growth
in oil and gas projects, and expansion in China. Underlying sales
increased 9 percent, excluding a 2 percent ($84 million) positive
contribution from the Metran, Tescom and Mobrey acquisitions
and a 2 percent ($79 million) favorable impact from foreign
currency translation. The increase in underlying sales reects
22 percent growth in Asia, 29 percent growth in Canada,
13 percent growth in Latin America and 5 percent growth in
the United States, while sales in Europe increased 1 percent
compared with 2004. Volume growth, leverage on the higher
sales of approximately 2 percentage points and savings from
prior cost reduction efforts drove a 41 percent increase in earn-
ings from $476 million in 2004 to $671 million for 2005.
                    
      changechange
(dollarsinmillions) 2004 2005 2006 ‘04-‘05 ‘05-‘06
Sales $2,936 3,242  10% 
Earnings $ 391 464  19% 
Margin 13.3% 14.3% 
 Sales in the Industrial Automation segment were
$3.8 billion in 2006, an increase of 16 percent compared to 2005.
Sales grew in all of the major geographic regions and in nearly all
of the businesses, reecting the continued favorable economic
environment for capital goods. Underlying sales grew 11 percent,
excluding a 6 percent ($208 million) contribution from the
Numatics, Saftronics and Jaure acquisitions and a 1 percent
($41 million) unfavorable impact from foreign currency transla-
tion. Underlying sales grew 12 percent in the United States and
11 percent internationally. The increase in international sales
primarily reects growth in Europe (10 percent) and Asia
(13 percent). The results reect growth in nearly all of the
businesses, with particular strength in the power generating
alternator and electrical distribution businesses. The underlying
growth reects both increased global industrial demand and
a nearly 3 percent positive impact from price and penetration
gains. In addition, the electrical distribution business’s strong
growth was driven by increased demand in North America,
particularly along the Gulf Coast of the United States. Earnings
increased 23 percent to $569 million for 2006, compared with
$464 million in 2005, reecting higher sales volume and prices,
as well as acquisitions. The margin increase was primarily due to
leverage on higher sales volume. Sales price increases and benets
from prior cost reduction efforts were offset by higher material,
wage and benet (pension) costs, as well as dilution from acquisi-
tions. The earnings increase was also aided by an approximate
$18 million payment received by the power transmission
business from dumping duties related to the U.S. Continued
Dumping and Subsidy Offset Act (Offset Act) in the current year,
compared with a $13 million payment received in 2005, and
lower litigation settlement costs compared to the prior year.