Fourth quarter net sales were up 2% to $5 billion, with underlying sales up 3% excluding unfavorable currency of 2% and a positive impact from acquisitions of 1%. Growth was in line with management expectations for Automation Solutions but below expectations for Commercial & Residential Solutions due to cooler weather conditions in North America that unfavorably impacted air conditioning and construction markets and continued slug-gishness in Asian markets.
Fourth quarter gross profit margin of 42.8% was up 70 basis points compared with the prior year, primarily due to solid operational execution and favorable price-cost.
Fourth quarter operating cash flow was up 18% to $1.2 billion, and free cash flow was up 40% to $1 billion. Full year operating cash flow was up 4% to $3 billion and free cash flow was up 6% to $2.4 billion, reflecting 105% conversion of net earnings.
“Emerson delivered a solid year, despite a lower growth environment than we anticipated,” said David N. Farr, Emerson chairman and CEO. “We grew above our markets, delivered strong earnings and cash flow, and returned $2.5 billion to our shareholders. We plan to announce a 4-cent dividend increase for 2020, which is higher than recent in-creases, and we plan greater increases as our dividend to free cash flow ratio improves below 50% in future years.
“The year required our organization to be nimble, as we shifted from a growth mindset at our Investor Conference last February to an increasing focus through the second half of our fiscal year on setting up the right cost position for what we expect will be a low or no-growth environment,” Farr added. “We are planning for a challenging economic environment in fiscal 2020. The US presidential election, continued trade tensions, and an increasing wave of corporate restructuring announcements will pressure global economies, leaving the large capital project cycle – which really hasn’t yet begun in our end markets – stalled. Fortunately, our businesses have proved they are resilient.”