Emerson CEO Apologizes After Cutting Profit Guidance

U.S. diversified manufacturer Emerson Electric cut its fiscal 2009 profit forecast Tuesday, saying that customers across its business segments have reduced their spending.

The maker of industrial products ranging from from factory automation networks to power and cooling systems for data centers said it now expects a profit of $2.40 per share to $2.60 per share, down from the revised $2.70 to $2.95 range it set in February.

This is the second time the St. Louis-based company has cut its profit target for its 2009 fiscal year, which ends Sept. 30. ``I have to apologize for how badly I have missed this forecast,'' Chief Executive David Farr told investors on a conference call. ``Economic times have been very unpredictable. The last 65, 75 days we have seen a dramatic freefall.''

Analysts, on average, are looking for profit of $2.47 per share, according to Reuters Estimates.

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Emerson expects full-year sales to fall 9 percent to 11 percent. It noted that it plans to spend about $1 billion on acquisitions this fiscal year and will likely record $200 million to $250 million in restructuring charges.

Farr said Emerson expects sales to continue to deteriorate through its fiscal year, with the worst results likely coming in the fourth fiscal quarter. He noted that segments of Emerson's business that are influenced by consumer spending may be starting to bottom out, with its pure industrial businesses likely continuing to deteriorate.

As the recession, which has lasted 17 months in the United States, lingers on, many companies are warning investors that the environment has become worse than they had expected when they set their 2009 budgets.

In the industrial sector, United Technologies and Rockwell Automation have cut their 2009 profit targets this year, and Textron Inc late last month told investors it was cutting back production schedules.

Emerson aims to raise more money on debt markets ``real soon,'' Farr told investors. He also noted that while the company prefers to fund takeovers with cash, it would use stock if needed to secure an attractive target.

Emerson shares were off 7 cents, or less than 1 percent, to $30.82 on the New York Stock Exchange. That came on a day that Wall Street was broadly lower amid concerns about the health of the banking sector.

Emerson shares have fallen about 43 percent over the past year, a more modest slide than the 53 percent fall of the Standard & Poor's capital goods industry index.

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