Tuesday, Emerson Electric Co. (EMR), a diversified manufacturing and technology company revised down its earnings and sales outlook for fiscal 2009, citing declining end-market demand and customer inventory reductions. This is the second time the company is slashing its outlook for the year.
Emerson's fiscal year ends in September. The company said that it now expects fiscal 2009 earnings to range between $2.40 and $2.60 per share, down from its prior revised expectation of $2.70 to $2.95 per share. The company's initial earnings guidance range for the year provided in November was $2.80 to $3.20 per share. On average, 16 analysts tracked by Thomson Reuters expect the company to earn $2.47 per share. Last year, the company posted per share earnings of $3.11.
According to Emerson, all its five segments - Process Management, Industrial Automation, Network Power, Climate Technologies, and Appliance and Tools, and the end-markets it serves, including residential, nonresidential and capital businesses, are experiencing weaknesses, as many customers have significantly reduced spending in response to tough economic conditions.
The company expects underlying sales for the year to decline by approximately 9% to 11% from 2008 levels.
Emerson also trimmed its net sales outlook range for the year to $21 billion - $21.7 billion, down from its revised sales outlook of $23 billion - $23.7 billion, provided in February. The company's initial sales outlook range issued in November was $23.5 billion to $25.5 billion. Wall Street analysts are looking for sales of $22.12 billion. Last year, the company's net sales totaled $24.81 billion.
The revised sales outlook takes into account an estimated 5% unfavorable impact from currency translation and a 1% favorable impact from completed acquisitions.
The company expects operating profit margin to be in the range of 15.7% to 16%, and pre-tax margin to range between 12.6% and 13.2% for fiscal 2009. Free cash flow for the year is projected to range between $2.5 billion and $2.7 billion and operating cash flow is expected in the range of $3.1 billion to $3.3 billion.
Emerson said that it expects to spend approximately $1 billion on acquisitions in fiscal 2009. Restructuring expense has increased as the global economy has weakened and is now anticipated to range between $200 million and $250 million, according to the company.
The company's Chairman, CEO and President David Farr said, We have been through challenging cycles before, and our operating team is well focused on generating cash flow, executing our restructuring programs to position ourselves for a strong recovery when it happens, and delivering solid profitability levels.
EMR is currently up 4.01% trading at $32.13 on a volume of 6 million shares.
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