Emerson Electric Company (EMR) has reported a 12.94 percent rise in profit for the quarter ended Dec. 31, 2016. The company has earned $349 million, or $0.53 a share in the quarter, compared with $309 million, or $0.48 a share for the same period last year.
Revenue during the quarter grew 3.76 percent to $3,337 million from $3,216 million in the previous year period. Gross margin for the quarter contracted 7 basis points over the previous year period to 42.37 percent. Total expenses were 85.59 percent of quarterly revenues, up from 84.14 percent for the same period last year. That has resulted in a contraction of 144 basis points in operating margin to 14.41 percent.
Operating income for the quarter was $481 million, compared with $510 million in the previous year period.
"Our strong first quarter results, which surpassed expectations, represent a solid start to the fiscal year and reflect an improving overall economic environment," said chairman and chief ecxecutive officer David N. Farr. "The benefits from our restructuring actions during the past two years played a critical role in our ability to deliver higher margins across many of our businesses. Considering the improving demand conditions during the quarter, particularly in the automation markets, we are increasing our 2017 full-year EPS guidance by 12 cents at both the top and bottom end of the range, including the 7 cent income tax benefit in the first quarter."
Emerson Electric Co expects revenue to grow in the range of 1 percent to 3 percent for the financial year 2017. For financial year 2017, the company projects diluted earnings per share to be in the range of $2.47 to $2.62.
Operating cash flow improves significantly
Emerson Electric Company has generated cash of $487 million from operating activities during the quarter, up 104.62 percent or $249 million, when compared with the last year period.
The company has spent $163 million cash to meet investing activities during the quarter as against cash inflow of $3,758 million in the last year period.
The company has spent $211 million cash to carry out financing activities during the quarter as against cash outgo of $2,920 million in the last year period.
Cash and cash equivalents stood at $3,109 million as on Dec. 31, 2016, down 25.10 percent or $1,042 million from $4,151 million on Dec. 31, 2015.
Working capital remains stable
Working capital of Emerson Electric Company remained stable for the quarter at $1,492 million, when compared with the previous year period. Current ratio was at 1.18 as on Dec. 31, 2016, up from 1.18 on Dec. 31, 2015.
Cash conversion cycle (CCC) has decreased to 37 days for the quarter from 82 days for the last year period. Days sales outstanding went down to 94 days for the quarter compared with 96 days for the same period last year.
Days inventory outstanding has decreased to 32 days for the quarter compared with 78 days for the previous year period. At the same time, days payable outstanding went down to 89 days for the quarter from 92 for the same period last year.
Debt increases substantially
Emerson Electric Company has witnessed an increase in total debt over the last one year. It stood at $7,439 million as on Dec. 31, 2016, up 82.82 percent or $3,370 million from $4,069 million on Dec. 31, 2015. Total debt was 34.54 percent of total assets as on Dec. 31, 2016, compared with 18.88 percent on Dec. 31, 2015. Debt to equity ratio was at 0.99 as on Dec. 31, 2016, up from 0.54 as on Dec. 31, 2015. Interest coverage ratio deteriorated to 10.23 for the quarter from 11.09 for the same period last year.
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