(Reuters) - Diversified U.S. manufacturer Emerson Electric Co (EMR.N) 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 December 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 December 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 (ETN.N) posted weaker-than-expected results, hurt by soft demand of its electrical and hydraulic systems used in trucks, cars and aircraft.
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 .SPX.
Reporting by Scott Malone; Editing by Lisa Von Ahn and Grant McCool