Growth in the Commercial & Residential Solutions platform resulted from favorable HVAC, refrigeration and US and Asian construction markets, while the Automation Solutions platform remained down due to the low price of oil but witnessed improving order rates, particularly in North America.
Pretax margin of 14.4% exceeded the prior year by 140 basis points. EBIT margin of 15.8% also increased 140 basis points primarily due to savings from restructuring activities. Operating cash flow from continuing operations of $410 million increased 6% versus the prior year. Including the impact of discontinued operations (Network Power, Leroy-Somer and Control Techniques), earnings per share were $0.48, down 9%, and operating cash flow was $238 million, down 51%.
“Our strong first quarter results, which surpassed expectations, represent a solid start to the fiscal year and reflect an improving overall economic environment,” said David N. Farr, chairman and CEO. “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.”
Considering the first quarter results and recent order trends, Emerson is raising its outlook for 2017. Full-year net sales are expected to be down 1% to 3%, with underlying sales flat to down 2% excluding unfavorable currency translation of approximately 1%. Earnings per share from continuing operations are now expected to be $2.47 to $2.62, including the $0.07 income tax benefit in the first quarter. Automation Solutions net sales are now expected to be down 5% to 7%, with underlying sales down 3% to 5% excluding unfavorable currency of approximately 2%. Commercial & Residential Solutions net and underlying sales are now expected to be up 3% to 5%.
“Our first quarter results reflect the positive momentum building within our two platform businesses as we begin the fiscal year,” added Farr. “While we expect significant challenges to persist throughout 2017, we are optimistic that the improving market conditions and broad-based increase in demand within many of our global served markets will benefit Emerson in the second half of the year.”
Feb. 8, 2017