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Emerson Electric Co. discusses business updates at J.P. Morgan’s Industrials Conference

March 14, 2024 | by stockcoin.net

emerson-electric-co-discusses-business-updates-at-jp-morgans-industrials-conference

Emerson Electric Co. recently took part in the highly-regarded J.P. Morgan’s 2024 Industrials Conference, where the company’s executives provided key updates on their business. Notably, they highlighted that orders experienced a 4% growth in the first quarter and are projected to rise by low-single digits in the first half of the year. With a backlog standing at $7.6 billion, Emerson Electric Co. expressed enthusiasm for the robust growth in their process and hybrid businesses, which have been propelled by emerging trends such as re-shoring, energy security, digitization, and sustainability. Anticipating a positive shift in the discrete cycle in the latter half of the year, the company expects steady growth in the process hybrid side of their operations. Remarkably, they also reported favorable performance across various regions, including the Middle East, India, Western Europe, Latin America, and China. While acknowledging the potential impact of the moratorium on LNG, Emerson Electric Co. remains cautiously optimistic about their overall growth trajectory. Moreover, they foresee a modest recovery in the discrete automation sector, particularly within automotive and industrial domains. Alongside ongoing investments in RF and mixed signal chips, the company maintains a positive outlook on their semiconductor business. Although their EV business is temporarily on hold, it is expected to rebound. Keeping a watchful eye on the machine builder segment, specifically in Germany, Emerson Electric Co. hopes for signs of improvement in the second half of the year. With a growing project funnel and an expected yield of 4-5%, the company remains confident in their future prospects while also foreseeing a gradual increase in backlog levels throughout the year.

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Orders and Backlogs

Orders grew by 4% in Q1

Emerson Electric Co. (EMR) reported a 4% growth in orders during the first quarter, indicating a positive start to the year for the company. This growth is a promising sign and reflects the company’s ability to attract and secure new business.

Expected increase in orders by low-single digits in the first half of the year

Looking ahead, Emerson anticipates a further increase in orders during the first half of the year. While the exact percentage remains to be seen, the company expects this growth to be in the low-single digits. This projection suggests continued demand for the company’s products and services.

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Backlogs remain at $7.6 billion

Emerson Electric’s backlogs continue to be substantial, with a current level of $7.6 billion. This indicates a healthy pipeline of work for the company and underscores its ability to deliver on its orders efficiently. The stability of backlogs provides stability to the company’s operations and serves as a reliable source of future revenue.

Process and Hybrid Businesses

Strong growth in process and hybrid businesses

Emerson Electric has experienced strong growth in its process and hybrid businesses. This growth can be attributed to several factors, including re-shoring, energy security, digitization, and sustainability. As companies seek to bring manufacturing processes closer to home, Emerson’s process and hybrid solutions have been in high demand.

Driven by re-shoring, energy security, digitization, and sustainability

Re-shoring, or the relocation of manufacturing operations to the domestic market, has gained momentum in recent years. Emerson’s process and hybrid businesses have benefited from this trend, as companies aim to reduce supply chain vulnerabilities and improve their energy security.

Furthermore, the increasing focus on digitization and sustainability in industries across the globe has created a favorable environment for Emerson’s offerings. The company’s solutions help customers optimize their operations, reduce energy consumption, and enhance overall efficiency.

Discrete Cycle and Growth

Expect discrete cycle to turn positive in the second half of the year

Emerson Electric anticipates a positive turn in the discrete cycle during the second half of the year. This is an encouraging projection, suggesting that demand for discrete products and services offered by the company will pick up in the coming months. As industries recover and invest in their operations, Emerson is poised to benefit from increased demand.

Anticipate consistent growth in the process hybrid side of the business

In addition to the expected upturn in the discrete cycle, Emerson also foresees consistent growth in the process hybrid side of its business. This projection indicates the company’s strong position in the market and its ability to meet customer needs in sectors like manufacturing, energy, and infrastructure. The company’s expertise and comprehensive product range make it a trusted partner for clients in these industries.

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Regional Performance

Experiencing growth in Middle East, India, Western Europe, Latin America, and China

Emerson Electric is witnessing growth across multiple regions. The Middle East, India, Western Europe, Latin America, and China have all shown positive performance in terms of demand for the company’s products and services. These regions represent key markets for Emerson and contribute significantly to its overall global presence.

The growth in these regions can be attributed to various factors, such as infrastructure development, industrial expansion, and increasing investments in digitalization and sustainability. Emerson’s ability to cater to the specific needs and challenges of each region has contributed to its success in these markets.

Cautious about LNG Moratorium

Cautious about impact of moratorium on LNG on business

While Emerson Electric remains optimistic about overall growth, the company expresses caution regarding the impact of the moratorium on liquefied natural gas (LNG) on its business. The moratorium, which restricts the development of new LNG projects, has the potential to affect the demand for Emerson’s solutions in the energy industry.

However, the company recognizes that the situation is fluid and subject to change. It remains committed to monitoring the evolving landscape and adapting its strategies accordingly to mitigate any potential impact on its business.

Recovery in Discrete Automation Business

Expect modest recovery in discrete automation business

Emerson Electric expects a modest recovery in its discrete automation business, particularly in sectors like automotive and industrial. As economic conditions improve and industries ramp up their operations, the demand for automation solutions is projected to increase. Emerson is well-positioned to capitalize on this recovery due to its extensive portfolio of automation products and services.

Particularly in areas like automotive and industrial

The automotive and industrial sectors are expected to be key drivers of growth in the discrete automation business for Emerson. As these sectors rebound from the challenges posed by the pandemic, there will be an increased emphasis on implementing automation solutions to improve efficiency, productivity, and overall operational performance. Emerson’s expertise in these areas positions it to meet the evolving needs of these industries.

Positive Outlook for Semiconductor Business

Positive outlook for semiconductor business

Emerson Electric holds a positive outlook for its semiconductor business. The company continues to make investments in radio frequency (RF) and mixed-signal chips, indicating its commitment to capturing opportunities in this fast-growing market. The rising demand for semiconductors, driven by advancements in technology and increasing connectivity, presents Emerson with significant growth potential.

Investments in RF and mixed signal chips continuing

As technology advances and the demand for connectivity grows, the need for RF and mixed-signal chips intensifies. Emerson recognizes this demand and is committed to investing in these areas. These investments position the company to capitalize on the expanding semiconductor market and enhance its presence in the industry.

Temporary Pause in EV Business

EV business temporarily paused but expected to bounce back

Emerson Electric’s electric vehicle (EV) business may have experienced a temporary pause, but the company remains optimistic about its future prospects. As the automotive industry continues to evolve, with a greater focus on sustainability and electrification, the demand for EV-related solutions is expected to rebound. Emerson’s expertise in electric vehicle charging infrastructure positions it well to capitalize on this emerging market.

Watching Machine Builder Segment

Watching machine builder segment, particularly in Germany

Emerson Electric is closely monitoring the machine builder segment, with a particular focus on Germany. As a key market for machine builders, Germany’s performance and trends can provide valuable insights into the overall state of the industry. Emerson’s vigilance in observing this segment demonstrates its commitment to staying ahead of market dynamics and addressing customer needs effectively.

Looking for signs of improvement in the second half of the year

Emerson’s watchful eye on the machine builder segment translates to a proactive approach in identifying signs of improvement. By closely tracking the performance of machine builders, the company aims to anticipate market shifts and align its strategies accordingly. As the second half of the year unfolds, Emerson will be evaluating key indicators to determine the direction of this segment and respond accordingly.

Project Funnel and Backlog Expectations

Expect project funnel to continue growing

Emerson Electric anticipates that its project funnel will continue to grow. This indicates a healthy pipeline of upcoming projects and opportunities for the company. The expanding project funnel is a testament to Emerson’s ability to attract and secure new business and underscores its reputation as a reliable and trusted partner for customers.

Anticipate yield of 4-5%

The company expects a yield of 4-5% from its project funnel, highlighting the anticipated success rate in converting opportunities into actual projects. This projection reflects Emerson’s confidence in its ability to deliver upon customer requirements and successfully execute projects across various industries.

Backlog levels currently healthy, but expect slow increase throughout the year

Emerson Electric’s current backlog levels are healthy, indicating a steady flow of work to be completed. However, the company also expects a slow increase in backlog levels throughout the year. This projection suggests a continued inflow of new orders and reinforces the expectation for sustained growth in the coming months. Emerson is well-prepared to handle the increasing demand and maintain its commitment to delivering high-quality solutions to its customers.

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