Emerson 2013 Annual Report Download - page 21

Emerson > 2013 Annual Report 19
Results of Operations
Years ended September 30 | Dollars in millions, except per share amounts
CHANGE CHANGE
2011 2012 2013 ‘11 - ‘12 ‘12 - ‘13
Net sales $24,222 24,412 24,669 1% 1%
Gross profit $ 9,557 9,768 9,952 2% 2%
Percent of sales 39.5% 40.0% 40.3%
SG&A $ 5,328 5,436 5,648
Percent of sales 22.0% 22.3% 22.9%
Goodwill impairment $ 19 592 528
Other deductions, net $ 356 401 362
Interest expense, net $ 223 224 218
Earnings from continuing operations before income taxes $ 3,631 3,115 3,196 (14)% 3%
Percent of sales 15.0% 12.8% 13.0%
Net earnings common stockholders $ 2,480 1,968 2,004 (21)% 2%
Percent of sales 10.2% 8.1% 8.1%
Diluted EPS – Net earnings $ 3.27 2.67 2.76 (18)% 3%
Return on common stockholders’ equity 24.6% 19.0% 19.2%
Return on total capital 19.6% 15.8% 16.4%
OVERVIEW
Emerson’s sales increased to $24.7 billion in 2013, up
1 percent compared with prior year, reflecting mixed end
markets and cautious levels of business investment amid
a challenging global economic environment. Underlying
sales for 2013 increased 2 percent, led by continued strong
growth in Process Management and moderate growth in
the Climate Technologies worldwide compressors business.
Foreign currency translation and a prior year divestiture
had a combined 1 percent unfavorable impact. Emerging
markets growth exceeded that of mature economies.
Asia grew 2 percent, the U.S. was flat and Europe declined
3 percent. Latin America and Middle East/Africa grew
11 percent and 13 percent, respectively.
Net earnings common stockholders were $2.0 billion in
2013, up 2 percent versus prior year. Diluted earnings
per share were $2.76, up 3 percent compared with $2.67
per share in 2012. Excluding impairment and income tax
charges, 2013 net earnings were $2.6 billion, up 3 percent,
while earnings per share were $3.54, up 4 percent
compared with $3.39 in 2012. These charges primarily
related to the embedded computing and power business,
and totaled $566 million ($0.78 per share) in 2013 and
$528 million ($0.72 per share) in 2012. See Goodwill
Impairment in the discussion that follows and Notes 3
and 6 for additional information.
Process Management reported strong sales and earnings
growth on continued demand in global energy and
chemical end markets. Climate Technologies sales and
earnings increased on solid demand in the compressors
business worldwide. Strong demand in U.S. residential end
markets supported underlying sales and earnings growth
in Commercial & Residential Solutions. Sales and earnings
declined in the Industrial Automation businesses due to
weakness in industrial goods end markets, particularly
Europe and the U.S. Earnings comparisons in Industrial
Automation were also unfavorably impacted by gains
from dumping duties received in 2012. Network Power
sales and earnings showed persistent weakness in
telecommunications and information technology
end markets.
The Company generated record operating cash flow of
$3.6 billion, an increase of 20 percent from $3.1 billion
in 2012. Free cash flow (operating cash flow less capital
expenditures) of $3.0 billion also reached record levels,
increasing 24 percent from prior year. Emerson is well
positioned moving into next year given its strong financial
position, global footprint in both mature and emerging
markets, and focus on products, technology and
customer solutions.