Emerson 2012 Annual Report Download - page 25

2012 Annual Report | 23
NET EARNINGS, RETURN ON EQUITY AND
RETURN ON TOTAL CAPITAL
Net earnings attributable to common stockholders
in 2012 were $2.0 billion, a decrease of 21 percent
compared with 2011. Net earnings per share of $2.67
decreased 18 percent. Net earnings and net earnings per
share for 2012 were reduced 21 percent primarily due
to the $528 million after-tax, $0.72 per share, goodwill
impairment charge. Return on common stockholders’
equity (net earnings attributable to common stockholders
divided by average common stockholders’ equity) was
19.0 percent in 2012 compared with 24.6 percent in
2011. Return on total capital was 15.8 percent in 2012
compared with 19.6 percent in 2011, and is computed
as net earnings attributable to common stockholders
excluding after-tax net interest expense, divided by
average common stockholders’ equity plus short- and
long-term debt less cash and short-term investments.
The charge reduced 2012 return on equity 5 percentage
points and return on total capital 4 percentage points.
Net earnings were $2.5 billion and net earnings per
share were $3.27 for 2011, both increases of 15 percent
compared with 2010. Net earnings as a percent of net
sales were 10.2 percent in 2011 and 10.3 percent in
2010. Return on common stockholders’ equity was
24.6 percent in 2011 compared with 23.6 percent in
2010. Return on total capital was 19.6 percent in 2011
compared with 18.9 percent in 2010.
Business Segments
Following is an analysis of segment results for 2012
compared with 2011, and 2011 compared with 2010.
The Company defines segment earnings as earnings
before interest and income taxes. The Commercial &
Residential Solutions segment was formerly named
Tools and Storage.
PROCESS MANAGEMENT
CHANGE CHANGE
(DOLLARS IN MILLIONS) 2010 2011 2012 ‘10 - ‘11 ‘11 - ‘12
Sales $6,022 7,000 7,899 16% 13%
Earnings $1,093 1,402 1,599 28% 14%
Margin 18.1% 20.0% 20.2%
2012 vs. 2011 – Process Management sales increased
$899 million to $7.9 billion as all businesses reported
higher sales. Strong growth in the measurement and
flow, valves and regulators, and systems and solutions
businesses was driven by solid global oil and gas invest-
ment and demand in the chemical and power end
markets. The supply chain disruption from Thailand
flooding that adversely affected results of several busi-
nesses in the first half of the year was resolved and nearly
all of the volume was recovered in the second half. Under-
lying sales increased 15 percent on volume growth while
foreign currency translation had a 2 percent
($135 million) unfavorable impact. Geographically,
underlying sales increased in all regions, including
18 percent in the United States, 13 percent in Asia,
9 percent in Europe, 28 percent in Latin America,
16 percent in Middle East/Africa and 14 percent in
Canada. Earnings increased $197 million, to
$1,599 million, on higher volume and leverage. Margin
increased slightly as benefits from volume, leverage
and cost reduction actions were partially offset by
approximately $30 million of incremental costs related
to Thailand flooding, a $44 million unfavorable impact
from foreign currency transactions, and higher wages
and other costs.
2011 vs. 2010 – Process Management sales were
$7.0 billion in 2011, an increase of $978 million as all busi-
nesses reported higher sales, led by very strong results
for the measurement and flow, valves, and systems and
solutions businesses as a result of growth in the oil and
gas, chemical, power and refining end markets. Under-
lying sales increased 14 percent on higher volume, which
included some market penetration gains, and foreign
currency translation had a 2 percent ($120 million)
favorable impact. Underlying sales increased in all major
geographic regions, including the United States
(14 percent), Asia (18 percent), Europe (8 percent),
NET EARNINGS PER SHARE*
* Excludes charges of $0.72 per share in 2012; $0.03 in 2011.
$3.06
08 12111009
$2.27
$2.84
$3.30* $3.39* 3%*
INCREASE
NET EARNINGS
PER SHARE
1211
$3.27
$2.67