Emerson 2010 Annual Report Download - page 27

2010 Annual Report
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NETWORK POWER
CHANGE CHANGE
(DOLLARS IN MILLIONS) 2008 2009 2010 ‘08 - ‘09 ‘09 - ‘10
Sales $6,416 5,456 5,828 (15)% 7%
Earnings $ 807 579 800 (28)% 38%
Margin 12.6% 10.6% 13.7%
2010 vs. 2009 - Sales for Network Power increased
7 percent to $5.8 billion in 2010 compared with
$5.5 billion in 2009, primarily from the Avocent acquisi-
tion, a strong increase in the embedded power business
and a moderate increase in the network power business
in Asia, partially offset by decreases in the uninterrupt-
ible power supply and precision cooling, energy systems,
embedded computing and inbound power systems
businesses. Underlying sales declined 2 percent on
lower prices, acquisitions had a 7 percent ($370 million)
favorable impact and foreign currency translation had
a 2 percent ($90 million) favorable impact. Geographi-
cally, underlying sales were flat in the United States, while
sales decreased in Europe (13 percent), Latin America
(5 percent), Canada (17 percent) and Middle East/Africa
(34 percent). Sales increased in Asia (6 percent), as the
Company continues to penetrate the Chinese market.
Earnings increased 38 percent to $800 million, compared
with $579 million in 2009, and margin increased over
3 percentage points largely as a result of cost savings
from aggressive restructuring actions taken in 2009,
particularly in the embedded computing and energy
systems businesses, as well as lower restructuring
expense of $93 million and a $17 million favorable impact
from foreign currency transactions. Lower selling prices
were partially offset by materials cost containment.
2009 vs. 2008 - Network Power sales decreased
15 percent to $5.5 billion in 2009 compared with
$6.4 billion in 2008, reflecting declines in the inbound
power, uninterruptible power supply, precision cooling
and embedded power businesses due to the slowdown
in customers’ capital spending, partially offset by growth
in the network power business in Asia. Underlying sales
declined 11 percent, foreign currency translation had a
3 percent ($191 million) unfavorable impact and a decline
in sales for the Embedding Computing acquisition had a
1 percent ($101 million) unfavorable impact. The under-
lying sales decrease reflected a 10 percent decline in
volume and a 1 percent impact from lower selling prices.
Geographically, underlying sales reflected decreases in
the United States (19 percent), Europe (22 percent) and
Latin America (3 percent), which were partially offset by
increases in Asia (1 percent), Canada (9 percent), and
Middle East/Africa (6 percent). Earnings decreased
28 percent to $579 million, compared with $807 million
in 2008, primarily due to lower sales volume and higher
rationalization costs of $90 million (particularly for the
integration of Embedded Computing), partially offset by
solid earnings growth for the energy systems business
and network power business in Asia. The margin decrease
reflects deleverage on lower sales volume and a nega-
tive impact from acquisitions, partially offset by savings
from cost reduction actions which contributed to margin
improvement for both the energy systems business and
network power business in Asia. Materials cost contain-
ment was partially offset by lower selling prices and
increased wage costs.
CLIMATE TECHNOLOGIES
CHANGE CHANGE
(DOLLARS IN MILLIONS) 2008 2009 2010 ‘08 - ‘09 ‘09 - ‘10
Sales $3,822 3,197 3,801 (16)% 19%
Earnings $ 569 411 691 (28)% 68%
Margin 14.9% 12.9% 18.2%
2010 vs. 2009 - Climate Technologies reported sales of
$3.8 billion for 2010, a 19 percent increase from 2009,
reflecting increases across all businesses, including
compressors, temperature sensors and heater controls.
Sales growth was strong in Asia and North America,
aided by stimulus programs in support of mandated
higher efficiency standards in China, growth in U.S. air
conditioning and refrigeration markets and a change
in refrigerant requirements in the U.S. Underlying sales
increased approximately 16 percent on higher volume,
which included slight new product penetration gains,
acquisitions added 2 percent ($55 million) and foreign
currency translation had a 1 percent ($22 million) favor-
able impact. The underlying sales increase reflects a
12 percent increase in the United States and 22 percent
internationally, including increases of 47 percent in Asia
and 21 percent in Latin America, partially offset by a
decline of 4 percent in Europe. Earnings increased
68 percent to $691 million compared with $411 million
in 2009, primarily due to higher sales volume, savings
from cost reduction actions, lower restructuring expense
of $35 million and a $15 million commercial litigation
charge included in 2009 costs. The margin increase in
excess of 5 percentage points reflects leverage on higher
sales volume, savings from cost reduction actions in prior
periods and material cost containment, partially offset
by lower prices and unfavorable product mix.