Emerson 2015 Annual Report Download - page 28

26 | 2015 Annual Report
12 percent) and decreased 1 percent in Europe. Latin
America was down 4 percent, Middle East/Africa was
up 26 percent and Canada increased 13 percent.
Earnings of $698 million decreased $39 million and
margin declined 0.5 percentage points primarily due
to unfavorable mix. Growth investments, and higher
rationalization and unfavorable foreign currency
transactions of $6 million each, were more than offset
by cost reduction savings. Global demand in the air
conditioning and refrigeration markets is expected to
remain favorable in 2016, supporting an outlook for
modest growth.
2014 vs. 2013 - Sales for Climate Technologies were
$4.1 billion in 2014, an increase of $233 million, or
6 percent on increased demand in air conditioning and
refrigeration. Underlying sales increased 6 percent
($237 million) on volume gains. Foreign currency
translation subtracted $4 million. The global air
conditioning business had solid growth, on strength
in the U.S., Europe and Asia, particularly China. Global
refrigeration had strong growth due primarily to
transportation. Growth in the solutions business was
very strong, although from a much smaller base, while
the temperature sensors and controls businesses were
mixed. Underlying sales increased 4 percent in the U.S.,
partially due to recent regulatory changes, 3 percent in
Europe, and 10 percent in Asia on 15 percent growth
in China. Latin America was up 19 percent, Middle
East/Africa was up 6 percent and Canada was flat.
Earnings of $737 million increased $21 million on higher
volume and materials cost containment. The increase
was partially offset by unfavorable mix, increased
investment spending, customer accommodation
expense and higher rationalization expense of
$11 million. Margin declined 0.6 percentage points.
COMMERCIAL & RESIDENTIAL SOLUTIONS
CHANGE CHANGE
(DOLLARS IN MILLIONS) 2013 2014 2015 ‘13-‘14 ‘14-‘15
Sales $1,865 1,924 1,924 3% —
Earnings $ 404 424 403 5% (5)%
Margin 21.7% 22.1% 21.0%
2015 vs. 2014 - Commercial & Residential Solutions
sales were $1.9 billion in 2015, flat compared with
the prior year. Underlying sales increased 2 percent
($48 million) on higher volume from favorable U.S.
construction markets, while foreign currency translation
($28 million) and the transfer of a small product line
($20 million) each deducted 1 percent. The sales
increase was led by strong growth in wet/dry vacuums
and modest growth in food waste disposers. The
professional tools and commercial storage businesses
decreased. Underlying sales were up 3 percent in the
U.S. and 1 percent internationally. Earnings of
$403 million were down $21 million and margin
declined 1.1 percentage points as higher volume and
resulting leverage was more than offset by unfavorable
mix, higher rationalization expense of $9 million, and
investments in growth programs. Favorable trends in
U.S. construction markets are expected to continue,
supporting expectations for moderate sales growth
and profit improvement in 2016.
2014 vs. 2013 - Commercial & Residential Solutions
sales were $1.9 billion in 2014, an increase of $59 million
or 3 percent. Underlying sales grew 3 percent
($60 million) on higher volume. Foreign currency
translation subtracted $1 million. The sales increase
was led by solid growth in the food waste disposers and
professional tools businesses and a moderate increase
in wet/dry vacuums. The storage businesses were mixed
with residential increasing slightly while the commercial
business decreased moderately. Underlying sales were
up 3 percent in the U.S. and 4 percent internationally.
Earnings of $424 million were up $20 million and margin
increased 0.4 percentage points, reflecting higher volume,
cost containment and a $6 million decrease in
rationalization expense, partially offset by
unfavorable mix.
Financial Position, Capital Resources
and Liquidity
The Company continues to generate substantial cash
from operations, is in a strong financial position with
total assets of $22 billion and common stockholders’
equity of $8 billion, and has the resources available
to reinvest for growth in existing businesses, pursue
strategic acquisitions and manage its capital structure
on a short- and long-term basis.
OPERATING CASH FLOW AND
PERCENTAGE RETURNED
TO STOCKHOLDERS (Dollars in billions)
1514131211
$3.2 $3.1
$3.7
$3.6
$2.5
61%
149%*
* Reflects use of proceeds from the power transmission solutions
divestiture for common stock share repurchases.