US conglomerate Emerson Electric Co met Wall Street forecasts with a 17 per cent rise in quarterly profit, but said its industrial businesses were slowing and its shares fell 4 per cent.The maker of factory automation systems, power systems for data centers and wireless networks used in oil and gas production, kept its full-year profit forecast steady, defying expectations for a cut. But it said this year’s sales would come in at the lower end of expectations, citing order trends and ongoing debt problems in the United States and Europe.
Emerson Chief Executive David Farr told analysts US and European governments were “dysfunctional” because they are unable to tackle excess debt and spending, and he was sharply critical of new US regulations on issues like fuel efficiency standards, which he said was inhibiting investment and jobs growth.“Washington is arranging the chairs on the Titanic, the way I look at it,” Farr said on a conference call. “I do not see the catalyst that would say the economy will be fundamentally different in the second half than we saw in the first half.”An uncertain economic and policy environment makes it impossible to forecast 2012 demand, Farr said.Concerns about slowing growth and its implications for 2012 earnings overshadowed a profit report that met analysts’ expectations.Emerson earned a net $683 million, or 90 cents per share, in the third quarter that ended June 30, up from $585 million, or 77 cents per share, a year earlier.Sales rose 16 per cent to $6.29 billion, missing the forecast of $6.4 billion, according to Thomson Reuters I/B/E/S.“Considering the flood of disappointing economic news during the period, results were respectable,” said capital goods analyst Matt Collins of Edward Jones.“It’s also encouraging that guidance didn’t come down for the full year,” he said. “After last week’s order update I think a cut was widely expected.”Last week, St. Louis-based Emerson said order growth was slowing and warned that US and European economies have entered a soft patch. US manufacturing grew at its slowest pace in two years in July as new orders contracted, casting doubt on expectations the faltering recovery would quickly regain steam.
From / Gulf Today