Emerson 2004 Annual Report Download - page 24

22 Emerson 2004
Net Earnings and Return on Equity
Net earnings for 2004 were $1.3 billion, or $2.98 per share, compared to $1.1 billion, or $2.59 per share, for
2003, increases of 15 percent. Net earnings in 2003 include the net gain from discontinued operations of
$76 million, or $0.18 per share. Net earnings as a percent of sales were 8.1 percent in 2004, compared to
7.8 percent in 2003. Return on average stockholders’ equity was 18.4 percent and 17.9 percent for 2004
and 2003, respectively.
Business Segments
Process Management
(dollars in millions) 2003 2004 Change
Sales $3,394) 3,703) 9%)
Earnings $ 388) 476) 23%)
Margin 11.4%) 12.9%)
Process management segment sales of $3.7 billion in 2004 were up $309 million, or 9 percent, over sales a
year ago, as this segment continues to grow internationally, win large projects and expand systems and
solutions. Underlying sales increased 5 percent, excluding a 4 percentage point ($140 million) favorable
impact from currency translation and a less than 0.5 percentage point negative impact from divestitures, net
of acquisitions. The increase in underlying sales reflects 21 percent growth in Asia, 11 percent growth in Latin
America and 1 percent growth in Europe, while sales in the United States decreased 1 percent compared with
the prior year. The slight decline in the United States reflects customers shifting production to lower cost
areas. Underlying results were also driven by sales increases in most businesses, particularly the measurement
business and the systems/solutions business due to project activity in Asia and the Middle East. Leverage from
these higher sales during the year as well as savings from prior cost reduction efforts drove an increase in
earnings before interest and taxes of 23 percent, from $388 million in the prior year to $476 million for 2004.
Industrial Automation
(dollars in millions) 2003 2004 Change
Sales $2,600) 2,936) 13%)
Earnings $ 330) 391) 18%)
Margin 12.7%) 13.3%)
Sales increases in most businesses drove a 13 percent increase in sales of the industrial automation segment
to $2.9 billion for 2004, and an earnings increase of 18 percent. The nearly 7 percent increase in underlying
sales volume, excluding a 6 percentage point ($157 million) favorable impact from currency, reflects almost
9 percent international sales growth, led by Europe with 5 percent and Asia with 28 percent, and a 4 percent
increase in the United States. The results reflect solid improvements across nearly all the businesses from
increased capital spending and industrial demand. The strongest growth across the segment was in the
European generator business and the ultrasonic plastic joining business worldwide. The U.S. increase
reflects growth in the capital goods markets due to a strong upturn in U.S. industrial fixed investment in
2004. Earnings increased 18 percent to $391 million for 2004, compared with $330 million in the prior year,
reflecting benefits from prior cost reduction efforts and increased volume and leverage from higher sales,
partially offset by higher litigation costs related to the electrical products business.
Network Power
(dollars in millions) 2003 2004 Change
Sales $2,316) 2,692) 16%)
Earnings $ 168) 297) 77%)
Margin 7.2%) 11.0%)
Emerson continues to expand
in Asia, particularly in China,
reaching $2.1 billion of sales
in 2004.
Asia Sales
0299 040301
$2.4
$1.2
$1.8
00
$0.6
(dollars in billions)