Emerson 2010 Annual Report Download - page 26

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2009 vs. 2008 - Process Management sales were
$6.1 billion in 2009, a decrease of $413 million, or
6 percent, from 2008. Nearly all of the Process busi-
nesses reported lower sales and earnings, particularly the
measurement and flow business resulting primarily from
weakness in the chemical, refining and marine markets.
Sales were down slightly for the valves business while the
power and water business had a small sales increase. The
sales decrease reflected a 2 percent decline in underlying
sales on lower volume, a 6 percent ($373 million) unfa-
vorable impact from foreign currency translation and a
2 percent ($94 million) favorable impact primarily from
the Roxar acquisition. Regionally, underlying sales
declined 6 percent in the United States while interna-
tional sales were flat, as growth in Asia (7 percent)
offset decreases in Europe (4 percent), Middle East/Africa
(3 percent), Canada (6 percent) and Latin America
(2 percent). Earnings decreased 18 percent to
$1,060 million from $1,301 million in the prior year,
reflecting lower sales volume, negative product mix,
higher rationalization costs of $43 million and a
$12 million negative impact from foreign currency
transactions, partially offset by savings from cost reduc-
tion actions. The margin decrease primarily reflects
unfavorable product mix (approximately 2 points) and
deleverage on lower volume, which were partially offset
by productivity improvements. Price increases and
materials cost containment were substantially offset
by higher wage costs.
SALES BY SEGMENT
n Process Management n Climate Technologies
n Industrial Automation n Tools and Storage
n Network Power
INDUSTRIAL AUTOMATION
CHANGE CHANGE
(DOLLARS IN MILLIONS) 2008 2009 2010 ‘08 - ‘09 ‘09 - ‘10
Sales $5,389 4,172 4,289 (23)% 3%
Earnings $ 865 470 591 (46)% 26%
Margin 16.1% 11.3% 13.8%
2010 vs. 2009 - Industrial Automation sales increased
3 percent to $4.3 billion in 2010, compared with 2009.
Sales results reflect a decline in the power generating
alternators and motors business due to weakness in
capital spending, while sales increased in all other busi-
nesses, especially the electrical drives and hermetic
motors businesses, which had strong sales increases,
and the fluid automation business, which reported solid
sales growth. Underlying sales declined 1 percent on
lower prices, the System Plast, Trident Power and SSB
acquisitions contributed 3 percent ($101 million) and
favorable foreign currency translation added 1 percent
($54 million). Underlying sales decreased 4 percent in
Europe and 2 percent in the United States, partially offset
by increases in Asia (9 percent) and Latin America
(17 percent). Earnings increased 26 percent to
$591 million for 2010, compared with $470 million in
2009, and margin increased over 2 percentage points as
savings from cost reduction efforts were partially offset
by unfavorable product mix. Price decreases were offset
by lower materials costs. Sales and earnings improved
throughout the year, with second half results much
stronger versus prior year as capital intensive end
markets served by this segment are recovering.
2009 vs. 2008 - Industrial Automation sales decreased
23 percent to $4.2 billion in 2009, compared with
$5.4 billion in 2008. Sales results reflect steep declines for
all businesses due to the slowdown in the capital goods
markets. Underlying sales declined 21 percent, unfavor-
able foreign currency translation subtracted 4 percent
($236 million) and the System Plast and Trident Power
acquisitions contributed 2 percent ($97 million). Under-
lying sales decreased 23 percent in the United States and
19 percent internationally, including decreases in Europe
(22 percent) and Asia (15 percent). Underlying sales
reflect a 22 percent decline in volume and an approxi-
mate 1 percent positive impact from higher selling
prices. Earnings decreased 46 percent to $470 million
for 2009, compared with $865 million in 2008, primarily
reflecting the lower sales volume. The margin decrease
of 4.8 percentage points reflects deleverage on the lower
sales volume (approximately 4 points) with significant
inventory reduction (approximately 1 point) and higher
rationalization costs of $27 million, partially offset by
savings from cost reduction actions and price increases.
20% 27%
17%
8%
28%