Industrial conglomerate Emerson Electric Co
This was the second consecutive quarter that Emerson missed Wall Street estimates, and the company said full-year profit would be below its earlier forecast. Its shares fell 4 percent to $34.83 on the New York Stock Exchange.
Net earnings fell to $387 million, or 51 cents per share, in the third quarter ended June 30 from $612 million, or 78 cents per share, a year earlier.
Excluding restructuring expenses, Emerson earned 56 cents a share, a penny short of the 57 cents analysts had forecast, according to Reuters Estimates.
Revenue fell 22 percent to $5.09 billion, compared with Wall Street forecasts for sales of $5.34 billion.
The St. Louis-based company said the strong U.S. dollar reduced sales in four of its five divisions, especially its biggest unit, process management, which serves energy, water and other process industries. Emerson expects pressure on 2010 revenue from the unit, which it called a late-cycle business.
But the company reported an improved operating profit margin from the prior quarter, citing the effect of its restructuring.
WEAK INDUSTRIAL MARKETS
The steepest sales decline was in Emerson's industrial automation segment, where revenue dropped by more than a third, reflecting very weak markets, and profits were down by three-quarters.
Separately, Emerson's three-month order rate was down 25 percent to 30 percent in June, a worse decline than in May. Orders were down 20 percent to 25 percent in the process management segment and down more than 30 percent in industrial automation, according to a regulatory filing.
The company said order trends were stabilizing but cited order trends in cutting its 2009 forecast.
Emerson now expects fiscal 2009 profit of $2.20 for $2.30 per share, below its May estimate of $2.40 to $2.60. Analysts expect 2009 profit of $2.30 per share.
JPMorgan analyst Stephen Tusa said the lowered forecast, weak orders and low quality of earnings recalled a similar pattern at Dover Corp
We would expect the same here, Tusa said in a research note.
Shares of Emerson closed Monday at $36.42. They have gained about 18 percent since July 8, outperforming the S&P 500 index in that time.
(Reporting by Nick Zieminski; Editing by Derek Caney and Lisa Von Ahn)