* First quarter profit of $0.62 per share meets Street view
* Revenue growth faster than analysts had forecast
* CEO says market conditions have stabilized
By Scott Malone
Feb 5 Diversified U.S. manufacturer Emerson
Electric Co met Wall Street profit forecasts for the
first quarter and said it sees signs that demand for its
industrial products may be picking up.
The maker of products including industrial controls,
uninterruptible power supplies and home-storage equipment said
on Tuesday that sales rose 4.6 percent, more than twice what
analysts had expected.
Sales growth in Asia, where Emerson was still shipping goods
delayed by floods in Thailand in 2011, and in the United States,
offset a 2 percent decline in Europe.
But St. Louis, Missouri-based Emerson's profit margins were
weaker than expected in the first fiscal quarter ended on Dec.
31. The company's shares declined 1.4 percent to $56.70 in early
trading on the New York Stock Exchange.
"Recent order trends suggest market conditions have
stabilized and may be poised for improvement, particularly in
the emerging markets," chief executive officer David Farr said
in a statement.
The company said it expected to earn $3.53 to $3.63 a share
for the year, in line with analysts' average forecast of $3.59
per share, with sales up 2 percent to 5 percent.
It had previously forecast sales to be flat to up 5 percent.
"It's encouraging that maybe this global environment is
starting to loosen up a little bit, but we're still approaching
from a very circumspect outlook," said Mike McGarr, portfolio
manager at Becker Capital Management, which had trimmed its
position in Emerson as it traded well above $50 in recent weeks.
Emerson said net income attributable to common shareholders
came to $454 million or 62 cents per share, in the first quarter
ended on Dec. 31, compared with $371 million, or 50 cents per
share, a year earlier.
The profit met the analysts' average forecast, according to
Thomson Reuters I/B/E/S.
Revenue rose 4.6 percent to $5.55 billion from $5.31 billion
a year earlier. Wall Street had looked for $5.43 billion.
Profit margins were somewhat lower than analysts had
expected, with the company's industrial automation, network
power and climate technologies units falling short, said
Bernstein Research analyst Steven Winoker.
Referring to the climate unit, which makes compressors used
in air conditioners, Winoker said, "There was growth and
improvement in Asia and U.S. residential air conditioning end
markets, but the low-margin nature of those markets were
reflected in the slight margin decrease."
Meanwhile, fellow U.S. manufacturer Eaton Corp
posted weaker-than-expected results, hurt by soft demand of its
electrical and hydraulic systems used in trucks, cars and
Emerson's peers include Rockwell Automation Inc and
At Monday's close, Emerson shares had risen about 12 percent
over the past year, trailing the 14 percent rise of the broad
Standard & Poor's 500 index.