Emerson 2013 Annual Report Download - page 27

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other costs and an $8 million unfavorable impact from
foreign currency transactions. Savings from cost reduction
actions and lower rationalization expense of $28 million
partially offset the decline. Materials cost containment
offset the unfavorable impact of lower prices. In July, the
company agreed to sell a controlling interest in embedded
computing and power. See Goodwill Impairment in this
discussion and Note 3.
2012 vs. 2011 – Sales for Network Power were $6.4 billion
in 2012, a $412 million decrease reflecting protracted
weakness in telecommunications and information
technology end markets and product rationalization in the
embedded computing and power business. A modest sales
decrease in the network power systems business reflected
weak demand in Europe and North America uninterruptible
power supplies, data center infrastructure management
products and North America telecommunications-related
DC power systems. This decrease was partially offset by
strong growth in Asia, including the National Broadband
Network contract in Australia, and modest growth in Latin
America. Total sales decreased 6 percent, reflecting an
underlying sales decrease of 5 percent on lower volume and
a 1 percent ($83 million) unfavorable impact from foreign
currency translation, while the Avtron acquisition had a
$27 million favorable impact. Geographically, underlying
sales decreased 10 percent in both the United States
and Europe and 2 percent in Latin America, while sales
increased 2 percent in Asia (down 4 percent in China) and
5 percent in Canada. Earnings of $624 million decreased
$132 million and margin decreased 1.4 percentage points
primarily due to lower volume and resulting deleverage,
particularly in the embedded computing and power
business, partially offset by cost reductions and materials
cost containment. Segment margin was also affected by
higher labor-related costs, unfavorable product mix, higher
rationalization expense of $33 million and a $10 million
unfavorable impact from foreign currency transactions.
Additionally, Chloride acquisition-related costs were
$24 million in 2011.
CLIMATE TECHNOLOGIES
CHANGE CHANGE
(DOLLARS IN MILLIONS) 2011 2012 2013 ‘11 - ‘12 ‘12 - ‘13
Sales $3,995 3,766 3,876 (6)% 3%
Earnings $ 709 668 716 (6)% 7%
Margin 17.8% 17.7% 18.5%
2013 vs. 2012 – Sales for Climate Technologies were
$3.9 billion in 2013, an increase of $110 million or
3 percent, primarily led by moderate growth in the
compressors business worldwide. The temperature
controls and temperature sensors businesses were up
slightly. The increase in compressor sales was driven by
solid growth in global air conditioning while refrigeration
sales declined slightly. Underlying segment sales increased
3 percent on volume growth. Foreign currency had a
$1 million unfavorable impact. Underlying sales increased
in nearly all geographies, with the United States up
2 percent, Asia up 5 percent, Europe up 2 percent and
Latin America up 2 percent. Sales decreased 1 percent in
Canada. Earnings increased $48 million on higher volume in
the compressors business, material cost containment and
savings from cost reduction actions. Margin increased
0.8 percentage points on savings from cost reduction
actions, materials cost containment and lower
rationalization expense of $8 million, partially offset by
unfavorable product mix.
2012 vs. 2011 – Climate Technologies sales decreased
$229 million in 2012 to $3.8 billion. Sales decreased in the
air conditioning, temperature controls and temperature
sensors businesses as global softness in residential markets
and overall weakness in Europe adversely affected results.
Air conditioning sales decreased in North America,
China and Europe, slightly offset by growth in the rest
of Asia (excluding China). Refrigeration sales were down
significantly in Europe and Asia, partially offset by slight
growth in the U.S. Underlying sales decreased 5 percent,
including 7 percent lower volume, slightly offset by
approximately 2 percent from price. Foreign currency had
a 1 percent ($42 million) unfavorable impact and the
marine controls acquisition had a negligible contribution
($21 million). Underlying sales decreased 4 percent in
the United States, 10 percent in Asia (down 18 percent
in China) and 9 percent in Europe, while sales increased
14 percent in Latin America and 3 percent in Canada.
Earnings decreased $41 million on lower volume, while
margin was essentially flat as the impact of deleverage was
minimized through savings from cost reduction actions and
lower warranty costs. Price actions were offset by higher
materials and other costs.
COMMERCIAL & RESIDENTIAL SOLUTIONS
CHANGE CHANGE
(DOLLARS IN MILLIONS) 2011 2012 2013 ‘11 - ‘12 ‘12 - ‘13
Sales $1,837 1,877 1,865 2% (1)%
Earnings $ 375 396 404 6% 2 %
Margin 20.4% 21.1% 21.7%
2013 vs. 2012 – Commercial & Residential Solutions sales
were $1.9 billion in 2013, a decrease of $12 million or
1 percent, including a negative 4 percent ($76 million)
comparative impact from the Knaack storage business
divestiture in 2012. Underlying sales grew 3 percent
($64 million) from higher volume. The sales increase was
led by strong growth in the food waste disposers business
and modest growth in the storage and professional tools