Emerson 2013 Annual Report Download - page 26

24 Emerson > 2013 Annual Report
INDUSTRIAL AUTOMATION
CHANGE CHANGE
(DOLLARS IN MILLIONS) 2011 2012 2013 ‘11 - ‘12 ‘12 - ‘13
Sales $5,294 5,188 4,885 (2)% (6)%
Earnings $ 830 871 777 5 % (11)%
Margin 15.7% 16.8% 15.9%
2013 vs. 2012 – Industrial Automation sales were
$4.9 billion in 2013, a decrease of $303 million or
6 percent, as global demand for industrial goods remained
weak, particularly in Europe. The power generating
alternators and renewable energy businesses led the
decline, largely due to customer inventory destocking
in the alternators business for most of the year. Smaller
decreases in the industrial motors, electrical drives, power
transmission and materials joining businesses were slightly
offset by an increase in hermetic motors from improved
HVAC compressor demand. Underlying sales decreased 6
percent on lower volume, while foreign currency translation
had a $13 million unfavorable impact. Underlying sales
decreased 11 percent in Europe and 6 percent in the
United States, while sales increased 4 percent in Latin
America and 6 percent in Middle East/Africa. Sales in Asia
were flat. Earnings of $777 million were down $94 million
and margin decreased 0.9 percentage points on lower
volume, deleverage in the power generating alternators
and industrial motors business and the electrical drives
business, and the comparative effect of a $43 million gain
in 2012 from the receipt of dumping duties. Savings from
cost reduction actions and materials cost containment
more than offset the volume decline and associated
deleverage. The gain in 2012 had an unfavorable impact of
0.8 percentage points on the margin comparison.
2012 vs. 2011 – Industrial Automation sales decreased
$106 million to $5.2 billion in 2012, reflecting solid
growth in the electrical distribution and materials joining
businesses offset by decreases in the electrical drives, solar
and wind power, and power generating alternators and
industrial motors businesses. First half softness in hermetic
motors due to a global decline in compressor demand also
affected results. Underlying sales grew 1 percent, reflecting
an estimated 3 percent benefit from price and 2 percent
lower volume, while unfavorable foreign currency
translation deducted 3 percent ($140 million). Underlying
sales increased 3 percent in the United States, 6 percent
in Latin America and 4 percent in Canada, while sales
decreased 1 percent in Europe. Sales in Asia were flat
(China down 3 percent). Earnings of $871 million were up
$41 million and margin increased 1.1 percentage points,
reflecting a $43 million gain on payments received by the
power transmission business related to dumping duties.
Operationally, pricing and cost reduction benefits were
largely offset by lower volume and resulting deleverage,
and higher materials and other costs.
NETWORK POWER
CHANGE CHANGE
(DOLLARS IN MILLIONS) 2011 2012 2013 ‘11 - ‘12 ‘12 - ‘13
Sales $6,811 6,399 6,155 (6)% (4)%
Earnings $ 756 624 554 (17)% (11)%
Margin 11.1% 9.7% 9.0%
2013 vs. 2012 – Sales for Network Power were $6.2 billion
in 2013, a decrease of $244 million or 4 percent,
reflecting continued weakness in telecommunications
and information technology end markets. The network
power systems business was down modestly as decreases
in the telecommunications-related power, infrastructure
management, precision cooling and uninterruptible power
supplies businesses were partially offset by an increase in
inbound power. Comparisons were adversely affected by
$110 million of higher sales from the large Australian
National Broadband Network project in 2012. The
embedded computing and power business declined sharply
due largely to lower end market demand and product
rationalization, which had an approximate 2 percentage
point negative impact on segment sales growth. Underlying
sales were down 4 percent overall on 3 percent lower volume
and 1 percent lower price. Foreign currency translation
had a $16 million unfavorable impact. Geographically,
underlying sales decreased 6 percent in Asia, 5 percent
in Europe, 2 percent in the United States and 8 percent in
Canada, while sales increased 3 percent in Latin America
and 5 percent in Middle East/Africa. Earnings of $554 million
decreased $70 million and margin decreased 0.7 percentage
points primarily due to lower volume, deleverage, higher
SALES BY SEGMENT
24%
19%
15%
8%
34%
n Process Management
n Industrial Automation
n Network Power
n Climate Technologies
n Commercial &
Residential Solutions
CONTINUOUS
PORTFOLIO
MANAGEMENT
DRIVES GROWTH