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Emerson's sales in biggest business fall 3 percent, shares drag
May 2, 2017 / 10:51 AM / 7 months ago

Emerson's sales in biggest business fall 3 percent, shares drag

(Reuters) - Emerson Electric Co (EMR.N) reported flat revenue, as a decline in sales in its biggest business, automation solutions, offset a rise in demand in its commercial and residential solutions business, dragging shares down as much as 5.4 percent.

FILE PHOTO: Emerson Electric Company Canadian headquarters is shown in Markham February 7, 2012. REUTERS/Mike Cassese/File Photo

The company said on Tuesday sales in the automation solutions business, which makes valves and regulators for the oil and gas industry, were down 3 percent, falling across most of its markets, except China and Europe.

Margins in the business fell 10 basis points to 15.5 percent, the company said.

Emerson Electric’s margin performance in the second quarter ended March 31 was slightly softer than expected, with the downside largely driven by the automation business, Morgan Stanley analysts said in a note.

However, the company raised its 2017 forecasts for both revenue and earnings, on continued strong demand from its commercial and residential solutions business.

The factory automation equipment maker expects earnings per share from continuing operations of $2.55-$2.65 in 2017, up from its earlier forecast of $2.47-$2.62.

Analysts on average were expecting 2017 earnings of $2.59 per share, according to Thomson Reuters I/B/E/S.

The company also said it expects full-year net sales to be flat compared with its earlier forecast of down 1-3 percent.

The St. Louis, Missouri-based company’s quarterly profit met Wall Street estimates, helped by an increase in sales in the commercial and residential solutions business.

Earnings from continuing operations rose to $384 million, or 58 cents per share in the quarter, from $375 million, or 57 cents per share, a year earlier.

Net sales were little changed at $3.57 billion.

Analysts on average were expecting second-quarter earnings of 58 cents per share, on sales of $3.50 billion.

Up to Monday’s close, Emerson shares had risen 10.5 percent in the past 12 months compared with a 17.5 percent rise in the broader Dow Jones U.S. Industrials Index .DJUSIN.

Reporting by Shashwat Awasthi and Ankit Ajmera in Bengaluru; Editing by Arun Koyyur

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