Emerson 2012 Annual Report Download - page 27

2012 Annual Report | 25
favorable impact. Geographically, underlying sales
decreased 10 percent in both the United States and
Europe and 2 percent in Latin America, while sales
increased 2 percent in Asia (down 4 percent in China) and
5 percent in Canada. Earnings of $624 million decreased
$132 million and margin decreased 1.4 percentage points
primarily due to lower volume and resulting deleverage,
particularly in the embedded computing and power
business, partially offset by cost reductions and materials
cost containment. Segment margin was also affected
by higher labor-related costs, unfavorable product mix,
higher rationalization expense of $33 million and a
$10 million unfavorable impact from foreign currency
transactions. Additionally, Chloride acquisition-related
costs were $24 million in 2011.
2011 vs. 2010 – Sales for Network Power increased
$983 million to $6.8 billion, on underlying sales growth
of 6 percent, a positive contribution from the Chloride
and Avocent acquisitions of 10 percent ($598 million)
and favorable foreign currency translation of 1 percent
($77 million). Led by strong results in the network power
systems business worldwide, underlying sales grew
7 percent on higher volume, less an estimated 1 percent
decline in pricing. Growth was strong in the North
American uninterruptible power supply and precision
cooling business and the embedded computing and
power business. Underlying sales increased 6 percent
in Asia, 3 percent in the United States, 19 percent in
Latin America, 5 percent in Europe and 40 percent in
Middle East/Africa. Earnings decreased $44 million to
$756 million, and margin decreased 2.6 percentage
points. Amortization of intangibles increased $67 million
due to the Chloride and Avocent acquisitions, and other
Chloride acquisition-related costs negatively impacted
earnings $24 million. Margin was also reduced by higher
labor-related costs in China, unfavorable product mix,
higher materials cost, aggressive competitive pricing in
the China telecommunications sector, and investment
spending on next-generation data center technologies.
Earnings benefited from volume leverage and savings
from prior period cost reductions.
CLIMATE TECHNOLOGIES
change CHANGE
(DOLLARS IN MILLIONS) 2010 2011 2012 ‘10 - ‘11 ‘11 - ‘12
Sales $3,801 3,995 3,766 5% (6)%
Earnings $ 691 709 668 3% (6)%
Margin 18.2% 17.8% 17.7%
2012 vs. 2011 – Climate Technologies sales decreased
$229 million in 2012 to $3.8 billion. Sales decreased in
the air conditioning, temperature controls and tempera-
ture sensors businesses as global softness in residential
markets and overall weakness in Europe adversely
affected results. Air conditioning sales decreased in North
America, China and Europe, slightly offset by growth in
the rest of Asia (excluding China). Refrigeration sales were
down significantly in Europe and Asia, partially offset by
slight growth in the U.S. Underlying sales decreased
5 percent, including 7 percent lower volume, slightly
offset by approximately 2 percent from price. Foreign
currency had a 1 percent ($42 million) unfavorable
impact and the marine controls acquisition had a
negligible contribution ($21 million). Underlying sales
decreased 4 percent in the United States, 10 percent in
Asia (down 18 percent in China) and 9 percent in Europe,
while sales increased 14 percent in Latin America and
3 percent in Canada. Earnings decreased $41 million on
lower volume, while the margin was essentially flat as
the impact of deleverage was minimized through savings
from cost reduction actions and lower warranty costs.
Price actions were offset by higher materials and
other costs.
2011 vs. 2010 – Climate Technologies reported sales of
$4.0 billion for 2011, a $194 million increase that reflected
a strong increase in the compressor business, partially
offset by share loss in the temperature controls business
and a decrease in the temperature sensors business. The
North American refrigeration and air conditioning end
markets experienced solid growth while results in Asia
were strong despite prior year growth that benefited
from stimulus programs in China. Sales growth reflected
a 3 percent underlying increase, including an estimated
2 percent from higher selling prices and approximately
1 percent from higher volume, a 1 percent ($42 million)
favorable impact from foreign currency translation and
a 1 percent ($28 million) positive contribution from
acquisitions. Underlying sales increased 7 percent inter-
nationally, including 7 percent in Asia, 26 percent in Latin
America and 3 percent in Europe, while sales were flat in
the United States due to the decline in the temperature
controls business. Earnings increased 3 percent to
$709 million, due to savings from prior period cost reduc-
tions and higher sales volume in the compressor business.
The margin was diluted by higher materials and other
costs, which were partially offset by higher selling prices,
and deleverage in the temperature controls business.