Emerson 2005 Annual Report Download - page 33

E M E R S O N 2 0 0 5 2 1
$3.30
$2.48
$1.65
$0.83
Process Management segment sales of $3.7 billion in 2004 were up $309 million, or 9 percent, over
2003 sales, as this segment continued to grow internationally, win large projects and expand systems and
solutions. Underlying sales increased 5 percent, excluding a 4 percent ($140 million) favorable impact
from currency translation and a less than 0.5 percent 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 2003. 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 of
23 percent, from $388 million in 2003 to $476 million for 2004.
Industrial Automation
‘03 - ‘04 ‘04 - ‘05
(dollars in millions) 2003 2004 2005 Change Change
Sales $2,600 2,936 3,242 13% 10%
Earnings $ 330 391 464 18% 19%
Margin 12.7% 13.3% 14.3%
Sales in the Industrial Automation segment increased 10 percent compared to 2004 to $3.2 billion in 2005,
with sales increases in all of the businesses and major geographic areas, reflecting the favorable economic
environment for capital goods. Underlying sales grew nearly 8 percent, excluding a nearly 3 percent
($78 million) favorable impact from currency. The underlying sales growth reflects an 11 percent increase in
the United States and a 5 percent increase in international sales, with 4 percent growth in Europe, 4 percent
growth in Asia and 25 percent growth in the Middle East. The results reflect solid improvements across
all the businesses, with particular strength in the power generating alternator and the power transmission
businesses, reflecting increased global industrial demand and an estimated 2 percent positive impact from
higher sales prices. Earnings increased 19 percent to $464 million for 2005, compared with $391 million in
2004, due to higher sales volume and leverage, while sales price increases nearly offset higher material costs
(particularly for steel and copper). The earnings increase was aided by a $13 million payment received by
the power transmission business from dumping duties related to the Byrd Amendment in the current year,
compared with a $2 million payment received in 2004, partially offset by a litigation settlement related to the
electrical products business.
Sales increases in most businesses drove a 13 percent increase in sales of the Industrial Automation segment
to $2.9 billion for 2004, compared to $2.6 billion in 2003 and an earnings increase of 18 percent over 2003.
The nearly 7 percent increase in underlying sales volume, excluding a 6 percent ($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 2003, 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.
Net earnings per share was a
record $3.40 in 2005, a 14 percent
increase over the prior year.
*Before accounting change
Earnings Per Share
00 05040302*01