Emerson 2014 Annual Report Download - page 27

2014 Emerson > 23
decreased $95 million, or 17 percent, as lower earnings
from the divestitures of $59 million and a $13 million
China research credit in 2013 negatively affected the
comparison 12 percentage points. The divestitures of
the lower margin Artesyn business, and the connectivity
solutions business, net of the research credit, improved
margin comparisons 0.5 percentage points. Cost
containment and lower rationalization expense of
$10 million were favorable. Materials cost containment
substantially offset lower pricing. Expectations are for
gradual near-term improvement in the data center
business and inconsistent demand in telecommunication
markets.
2013 vs. 2012 - Sales for Network Power were
$6.2 billion in 2013, a decrease of $244 million or
4 percent, reflecting weakness in telecommunications
and information technology end markets. The
network power systems business was down modestly
as decreases in the telecommunications power,
infrastructure management, thermal management and
uninterruptible power supplies businesses were partially
offset by an increase in critical power. Comparisons
were adversely affected by $110 million of higher sales
from the large Australian National Broadband Network
project in 2012. The Artesyn 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 U.S. 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 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.
CLIMATE TECHNOLOGIES
CHANGE CHANGE
(DOLLARS IN MILLIONS) 2012 2013 2014 ‘12-‘13 ‘13-‘14
Sales $3,766 3,876 4,109 3% 6%
Earnings $ 668 716 737 7% 3%
Margin 17.7% 18.5% 17.9%
2014 vs. 2013 - Sales for Climate Technologies were
$4.1 billion in 2014, an increase of $233 million, or
6 percent on increased demand in air conditioning and
refrigeration. Underlying sales increased 6 percent
($237 million) on volume gains. Foreign currency
translation subtracted $4 million. The global air
conditioning business had solid growth, on strength
in the U.S., Europe and Asia, particularly China. Global
refrigeration had strong growth due primarily to
transportation. Growth in the solutions business was
very strong, although from a much smaller base, while
the temperature sensors and controls businesses were
mixed. Underlying sales increased 4 percent in the U.S.,
partially due to recent regulatory changes, 3 percent in
Europe, and 10 percent in Asia on 15 percent growth
in China. Latin America was up 19 percent, Middle
East/Africa was up 6 percent and Canada was flat.
Earnings of $737 million increased $21 million on higher
volume and materials cost containment. The increase
was partially offset by unfavorable mix, increased
investment spending, customer accommodation
expense and higher rationalization expense of
$11 million. Margin declined 0.6 percentage points.
North America residential demand will accelerate into
the next quarter and then slow in mid-year 2015 as
customers work through inventory purchased ahead
of regulatory changes. Other market conditions are
expected to remain favorable in North America and Asia.
2013 vs. 2012 - Sales for Climate Technologies were
$3.9 billion in 2013, an increase of $110 million, or
3 percent, primarily due to 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 and
foreign currency had a $1 million unfavorable impact.
Underlying sales increased in nearly all geographies,
with the U.S. 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 cost reduction
actions. Margin increased 0.8 percentage points on
cost reduction actions, materials cost containment and
lower rationalization expense of $8 million, partially
offset by unfavorable mix.