Emerson 2014 Annual Report Download - page 22

2014 Emerson > 18
NET SALES
Net sales for 2014 were $24.5 billion, a decrease of
$132 million, or 1 percent compared with 2013, due to
the divestitures of the embedded computing and power
(now Artesyn Embedded Technologies or “Artesyn”)
and connectivity solutions businesses. Consolidated
results reflect a 3 percent ($729 million) increase in
underlying sales driven by volume gains. Underlying
sales exclude divestitures, acquisitions and foreign
currency translation. Divestitures subtracted 5 percent
($1,112 million), acquisitions added 1 percent
($328 million), and foreign currency translation
subtracted $77 million. Underlying sales grew 4 percent
in the U.S. and 2 percent internationally, while growth
rates in emerging markets were slightly stronger than
in mature markets. Reported sales growth was led by
Process Management, which increased $579 million
including acquisitions, and Climate Technologies, which
increased $233 million. Sales in Industrial Automation
and Commercial & Residential Solutions increased
$105 million and $59 million, respectively. Network
Power decreased $1,082 million due to divestitures.
Net sales for 2013 were $24.7 billion, an increase
of $257 million, or 1 percent compared with 2012.
Consolidated results reflect
a 2 percent ($388 million)
increase in underlying sales
on volume gains. Foreign
currency translation
($55 million) and
divestitures, net of
acquisitions ($76 million)
had a combined negative
1 percent impact on net
sales. Underlying sales were
flat in the U.S. and grew
3 percent internationally as
emerging markets growth
exceeded that of mature
economies. Segment
results were mixed as sales
in Process Management
increased $711 million
and Climate Technologies
increased $110 million,
while sales in Industrial Automation and Network Power
decreased $303 million and $244 million, respectively.
Commercial & Residential Solutions decreased
$12 million due to the 2012 divestiture of Knaack,
largely offset by growth in the remaining businesses.
INTERNATIONAL SALES
Emerson is a global business with international sales
representing 58 percent of total sales, including
U.S. exports. The Company generally expects faster
economic growth in emerging markets in Asia, Latin
America, Eastern Europe and Middle East/Africa.
International destination sales, including U.S. exports,
decreased 3 percent, to $14.2 billion in 2014, primarily
reflecting the divestitures in Network Power, partially
offset by increases in Process Management, Climate
Technologies and Commercial & Residential Solutions.
U.S. exports of $1.4 billion were down 13 percent
compared with 2013 primarily due to the Artesyn
divestiture. Underlying international destination sales
grew 2 percent on volume, as divestitures, acquisitions
and foreign currency translation had a 5 percent
unfavorable impact on the comparison. Underlying sales
increased 1 percent in Europe, 4 percent in Asia (China
up 7 percent), 2 percent in Latin America and 1 percent
in Canada, and declined 1 percent in Middle East/Africa.
Lingering European economic weakness, as well as recent
political instability in Eastern Europe and Middle East/
Africa have hampered growth in these regions. Origin
sales by international subsidiaries, including shipments
to the U.S., totaled $12.9 billion in 2014, down
2 percent compared with 2013 due to divestitures.
International destination sales increased 2 percent in
2013, to $14.7 billion, reflecting increases in Process
Management and Climate Technologies, offset by
decreases in Network Power, Industrial Automation
and Commercial & Residential Solutions. U.S. exports
of $1.6 billion were up 2 percent compared with 2012.
Underlying international destination sales grew
3 percent on volume, as foreign currency translation
had a 1 percent unfavorable impact on the comparison
with 2012. Underlying sales increased 2 percent in Asia,
11 percent in Latin America, 13 percent in Middle East/
Africa and 4 percent in Canada, and decreased 3 percent
in Europe. Sales by international subsidiaries, including
shipments to the U.S., totaled $13.1 billion in 2013, up
2 percent compared with 2012.
ACQUISITIONS AND DIVESTITURES
The Company acquired Virgo Valves and Controls
Limited and Enardo Holdings in 2014. Virgo
manufactures engineered valves and automation
systems while Enardo manufactures tank and terminal
safety equipment used in oil and gas, chemicals and
other industries. Both businesses are reported in Process
Management, complement the existing portfolio
and create opportunities for additional growth. The
Company also acquired four other smaller businesses
in 2014, in Process Management and Network Power.
SALES BY GEOGRAPHIC
DESTINATION
Europe
20%
Latin America
6%
United States
and Canada
46%
Asia
22%
Middle East/Africa
6%