Emerson 2012 Annual Report Download - page 26

24 | 2012 Annual Report
Canada (38 percent), Latin America (15 percent) and
Middle East/Africa (7 percent). Earnings increased
28 percent, to $1,402 million, and margin increased
approximately 2 percentage points, primarily due to
higher sales volume and resulting leverage, savings from
prior period cost reductions, $24 million lower rational-
ization expense, and an $8 million favorable impact from
foreign currency transactions compared to prior year,
partially offset by increased business development invest-
ments, wages and other costs.
INDUSTRIAL AUTOMATION
CHANGE CHANGE
(dollars in millions) 2010 2011 2012 ‘10 - ‘11 ‘11 - ‘12
Sales $4,289 5,294 5,188 23% (2)%
Earnings $ 591 830 871 40% 5 %
Margin 13.8% 15.7% 16.8%
2012 vs. 2011 – Industrial Automation sales decreased
$106 million to $5.2 billion in 2012, reflecting solid
growth in the electrical distribution and ultrasonic
welding businesses offset by decreases in the electrical
drives, solar and wind power, and power generating
alternators and industrial motors businesses. First half
softness in hermetic motors due to a global decline in
compressor demand also affected results. Underlying
sales grew 1 percent, reflecting an estimated 3 percent
benefit from price and 2 percent lower volume, while
unfavorable foreign currency translation deducted
3 percent ($140 million). Underlying sales increased
3 percent in the United States, 6 percent in Latin America
and 4 percent in Canada, while sales decreased 1 percent
in Europe. Sales in Asia were flat (China down 3 percent).
Earnings of $871 million were up $41 million and margin
increased 1.1 percentage points, reflecting a $43 million
gain on payments received by the power transmission
business related to dumping duties (see Note 4). Opera-
tionally, pricing and cost reduction benefits were largely
offset by lower volume and resulting deleverage, and
higher materials and other costs.
2011 vs. 2010 – Industrial Automation sales increased
$1,005 million to $5.3 billion in 2011, reflecting improve-
ment in the capital goods end markets. Sales increased
in all businesses led by very strong growth in the power
generating alternators, fluid automation, electrical drives
and power transmission businesses. Underlying sales
increased 21 percent and foreign currency translation had
a 2 percent ($92 million) favorable impact. The under-
lying sales growth reflected approximately 18 percent
higher volume and an estimated 3 percent benefit from
higher selling prices. Underlying sales increased in all
regions, including 19 percent in the United States,
21 percent in both Europe and Asia, 49 percent in Middle
East/Africa and 36 percent in Latin America. Earnings
increased $239 million, to $830 million, and margin
increased approximately 2 percentage points, reflecting
higher sales volume and resulting leverage, savings
from prior period cost reductions, and lower rationaliza-
tion costs of $16 million, slightly offset by a $9 million
unfavorable impact from foreign currency transactions.
Higher materials costs were substantially offset by higher
selling prices.
NETWORK POWER
change CHANGE
(dollars in millions) 2010 2011 2012 ‘10 - ‘11 ‘11 - ‘12
Sales $5,828 6,811 6,399 17 % (6)%
Earnings $ 800 756 624 (6)% (17)%
Margin 13.7% 11.1% 9.7%
2012 vs. 2011 – Sales for Network Power were
$6.4 billion in 2012, a $412 million decrease reflecting
protracted weakness in telecommunications and
information technology end markets and product
rationalization in the embedded computing and power
business. A modest sales decrease in the network power
systems business reflects weak demand in Europe and
North America uninterruptible power supplies, data
center infrastructure management products, and North
America telecommunications-related DC power systems.
This decrease was partially offset by strong growth in
Asia, including the National Broadband Network contract
in Australia, and modest growth in Latin America. Total
sales decreased 6 percent, reflecting an underlying sales
decrease of 5 percent on lower volume and a 1 percent
($83 million) unfavorable impact from foreign currency
translation, while the Avtron acquisition had a $27 million
SALES BY SEGMENT
25%
21%
15%
8%
31%
n Process Management
n Industrial Automation
n Network Power
n Climate Technologies
n Commercial &
Residential Solutions
CONTINUOUS
PORTFOLIO
MANAGEMENT
DRIVES GROWTH