Emerson 2009 Annual Report Download - page 18

Emerson 200916
improvements. Price increases and materials cost
containment were substantially offset by higher
wage costs.
 Process Management segment sales were
$6.7 billion in 2008, an increase of $953 million, or
17 percent, over 2007, reecting higher volume and
favorable foreign currency translation. These results
reect the Company’s continued investment in next-
generation technologies and expanding the global reach
of the solutions and services businesses, as well as the
strong worldwide growth in energy and power markets.
All of the Process businesses reported higher revenues,
with sales particularly strong for the valves, measure-
ment and systems businesses. Underlying sales increased
approximately 14 percent, reecting 13 percent from
volume, which includes an estimated 3 percent from
penetration gains, and 1 percent from higher pricing.
Foreign currency translation had a 4 percent ($225 million)
favorable impact and the Brooks divestiture, net of
acquisitions, had an unfavorable impact of 1 percent
($35 million). The underlying sales increase reects
growth in all geographic regions compared with the prior
year, including Asia (21 percent), the United States
(12 percent), Europe (7 percent), Latin America
(22 percent), Canada (13 percent) and Middle East/Africa
(14 percent). Earnings increased 23 percent to
$1,306 million from $1,066 million in the prior year,
reecting higher sales volume, savings from cost reduc-
tions and materials cost containment and the benet
from foreign currency translation. The margin increase
primarily reects leverage on the higher volume, price
increases and cost containment actions, which were
partially offset by higher wage costs, unfavorable product
mix and strategic investments to support the growth of
these businesses.

    C h A n G e c h a n g e 
(d o l l A R s in m i l l i o n s ) 2007 2008 2009 ‘07-‘08 ‘08 - ‘09
Sales $4,269 4,852  14% 
Earnings $ 665 727  9% 
Margin 15.6% 15.0% 
 Industrial Automation segment sales
decreased 24 percent to $3.7 billion in 2009, compared
with $4.9 billion in 2008. Sales results reect steep
declines for all businesses due to the slowdown in
the capital goods markets. Underlying sales declined
22 percent, unfavorable foreign currency translation
subtracted 4 percent ($236 million) and the System Plast
and Trident Power acquisitions contributed 2 percent
($97 million). Underlying sales decreased 25 percent
in the United States and 19 percent internationally,
including decreases in Europe (22 percent) and Asia
(15 percent). Underlying sales reect a 23 percent decline
in volume and an approximate 1 percent positive impact
from higher selling prices. Earnings decreased 51 percent
to $354 million for 2009, compared with $727 million
in 2008, primarily reecting the lower sales volume.
The margin decrease of 5.4 percentage points reects
deleverage on the lower sales volume (approximately
4 points) with signicant inventory reduction (approxi-
mately 1 point) and higher rationalization costs of
$28 million, partially offset by savings from cost reduction
actions and price increases.
 Industrial Automation sales increased
14 percent to $4.9 billion in 2008, compared with
$4.3 billion in 2007. Sales grew in all lines of business and
in nearly all geographic regions, reecting strength in the
power generating alternator, uid automation, electronic
drives, electrical distribution and materials joining busi-
nesses. Underlying sales growth was 7 percent, including
8 percent in the United States and 6 percent internation-
ally, and favorable foreign currency translation added
7 percent ($278 million). The U.S. growth particularly
reects the alternator business, which was driven by
increased demand for backup generators. The interna-
tional sales growth primarily reects increases in Europe
(4 percent) and Asia (17 percent). The underlying growth
reects 6 percent from volume, as well as an approximate
1 percent positive impact from price. Earnings increased
9 percent to $727 million for 2008, compared with
$665 million in 2007, reecting higher sales volume
and the benet from foreign currency translation. The
margin decrease reects a lower payment received by the
power transmission business for dumping duties under
the U.S. Continued Dumping and Subsidy Offset Act. The
Company received only $3 million in 2008 versus
$24 million received in scal 2007. The Company does
not expect to receive any signicant payments in the
future. Margin was positively impacted by leverage on the
higher sales volume and benets from prior cost reduc-
tion efforts. Higher sales prices were substantially offset
by higher material and wage costs, as well as unfavorable
product mix, which negatively impacted margin.

    C h A n G e c h a n g e 
(d o l l A R s in m i l l i o n s ) 2007 2008 2009 ‘07-‘08 ‘08 - ‘09
Sales $5,150 6,312  23% 
Earnings $ 645 794  23% 
Margin 12.5% 12.6% 
 Sales in the Network Power segment
decreased 15 percent to $5.4 billion in 2009 compared
with $6.3 billion in 2008, reecting declines in the