Emerson 2014 Annual Report Download - page 25

2014 Emerson > 21
NET EARNINGS AND EARNINGS
PER SHARE; RETURNS ON EQUITY AND
TOTAL CAPITAL
Net earnings attributable to common stockholders in
2014 were $2.1 billion, up 7 percent compared with
2013, and diluted earnings per share were $3.03, up
10 percent. Earnings per share growth benefited
from the purchase of common stock for treasury. The
goodwill impairment charge in 2014 was $58 million
and $0.06 per share lower than goodwill impairment
and income tax charges in 2013, which aided both
earnings and earnings per share growth 4 percentage
points. Segment earnings in 2014 increased
$109 million in Process Management, $21 million
in Climate Technologies, $25 million in Industrial
Automation and $20 million in Commercial &
Residential Solutions. Earnings decreased $95 million
in Network Power largely due to divestitures. See the
Business Segments discussion that follows and Note 17
for additional information.
Net earnings attributable to common stockholders
of $2.0 billion in 2013 were up 2 percent compared
with 2012, and diluted earnings per share were $2.76,
up 3 percent versus $2.67. Goodwill impairment and
income tax charges in 2013 were $38 million and $0.06
per share higher than in 2012, and reduced earnings
and earnings per share growth 1 percentage point.
Segment earnings increased $210 million in Process
Management, $48 million in Climate Technologies
and $8 million in Commercial & Residential Solutions.
Earnings decreased $94 million in Industrial Automation
and $70 million in Network Power.
Return on common stockholders’ equity (net earnings
attributable to common stockholders divided by average
common stockholders’ equity) was 20.7 percent in 2014
compared with 19.2 percent in 2013 and 19.0 percent in
2012. Return on total capital was 17.5 percent in 2014
compared with 16.4 percent in 2013 and 15.8 percent
in 2012 (computed as net earnings attributable to
common stockholders excluding after-tax net interest
expense, divided by average common stockholders’
equity plus short- and long-term debt less cash and
short-term investments). Goodwill impairment charges
reduced the 2014 and 2013 returns on common
stockholders’ equity and total capital approximately
3 percentage points, and reduced the 2012 returns
approximately 4 percentage points.
Business Segments
Following is an analysis of segment results for 2014
compared with 2013, and 2013 compared with 2012.
The Company defines segment earnings as earnings
before interest and income taxes.
PROCESS MANAGEMENT
CHANGE CHANGE
(DOLLARS IN MILLIONS) 2012 2013 2014 ‘12-‘13 ‘13-‘14
Sales $7,899 8,610 9,189 9% 7%
Earnings $1,599 1,809 1,918 13% 6%
Margin 20.2% 21.0% 20.9%
2014 vs. 2013 - Process Management reported sales
of $9.2 billion in 2014, an increase of $579 million, or
7 percent on continuing solid demand in energy and
chemicals end markets and supported by acquisitions.
Underlying sales increased 4 percent ($299 million)
on volume growth, acquisitions added 4 percent
($328 million) and foreign currency translation
subtracted 1 percent ($48 million). The systems
and solutions business had solid growth and the
measurement devices business was up moderately.
The final control business had strong growth due to
the Virgo and Enardo acquisitions. Underlying sales
increased 8 percent in the U.S., 3 percent in Europe and
2 percent in Asia, with 5 percent growth in China. Latin
America decreased 1 percent, Middle East/Africa was
down 4 percent and Canada grew 2 percent. Earnings
increased $109 million on
higher volume, including
acquisitions, cost reduction
savings and materials cost
containment, partially
offset by unfavorable mix
and other costs. Higher
business investment
spending was largely
offset by favorable foreign
currency transactions
of $20 million. Margin
declined 0.1 percentage
points. Recent order trends
provide strong momentum
into next year.
2013 vs. 2012 - Process
Management reported
sales of $8.6 billion in
2013, an increase of
$711 million or 9 percent, on strong growth in the
measurement devices, final control and systems and
solutions businesses, reflecting continued global oil and
gas investment and demand in chemicals and power
end markets. Underlying sales increased 9 percent on
volume, while foreign currency translation had a
$23 million unfavorable impact. Underlying sales
growth was modest in the U.S., up 3 percent, while
growth was strong internationally. Asia was up
12 percent, Europe up 7 percent, Latin America up
11
14
13
12
10
NET EARNINGS PER SHARE
*Excludes per share charges of
$0.72 in 2014, $0.78 in 2013,
$0.72 in 2012 and $0.03 in 2011.
$2.84
$3.30*
$3.54*
$3.39*
$3.75*
$3.27
$2.76
$2.67
$3.03