Process Management Investor Update

Transcription

1 Process Management Investor Update John Berra Executive Vice President February 8, 2008 Safe Harbor Statement Our commentary and responses to your questions may contain forward-looking statements, including our outlook for the remainder of the year and Emerson undertakes no obligation to update any such statement to reflect later developments. Information on factors that could cause actual results to vary materially from those discussed today is available in our most recent Annual Report on Form 10-K as filed with the SEC. Non-GAAP Measures In this presentation we will discuss some non-gaap measures (denoted with an *) in talking about our company s performance, and the reconciliation of those measures to the most comparable GAAP measures is contained within this presentation or is available at our website under the investor relations tab.

2 Process Management Summary CAGR Orders $4.5B $5.3B $6.2B 17.8% Sales $4.2B $4.9B $5.7B 16.5% Earnings $0.67B $0.88B $1.07B 26.0% % of Sales 16.0% 18.0% 18.7% Global Manufacturing Facilities United States/Canada 20 Europe 20 Asia 10 Latin America 5 % Best Cost ~30% 2007 Sales by Product Systems, Solutions & Services 24% 31% Valves & Regulators 45% 2007 Sales by Geography ROW Asia 20% 22% 24% 34% Measurement Devices United States Europe

3 Key Messages We continue our run with record breaking orders, sales, profitability and returns We are the largest, broadest and most geographically balanced supplier of process automation and our markets remain strong PlantWeb changed the industry and wireless technology will widen our lead -- another Game- Changer for our customers Emerson adds value in everything from managing the most sophisticated projects to fulfilling the dayto-day, quick-delivery MRO requirements

4 Process Management Summary CAGR Orders $4.5B $5.3B $6.2B 17.8% Sales $4.2B $4.9B $5.7B 16.5% Earnings $0.67B $0.88B $1.07B 26.0% % of Sales 16.0% 18.0% 18.7% Global Manufacturing Facilities United States/Canada 20 Europe 20 Asia 10 Latin America 5 % Best Cost ~30% 2007 Sales by Product Systems, Solutions & Services 24% 31% Valves & Regulators 45% 2007 Sales by Geography ROW Asia 20% 22% 24% 34% Measurement Devices United States Europe

5 Key Messages We continue our run with record breaking orders, sales, profitability and returns We are the largest, broadest and most geographically balanced supplier of process automation and our markets remain strong PlantWeb changed the industry and wireless technology will widen our lead -- another Game- Changer for our customers Emerson adds value in everything from managing the most sophisticated projects to fulfilling the dayto-day, quick-delivery MRO requirements

6 2007 Process Management Sales by World Area and Industry Middle East/Africa Asia Latin America 10% 20% Canada 5% 7% 24% 34% US Food & Beverage Life Science Pulp & Paper Refining Other 2% 3% 3% 9% 16% 15% 17% Oil & Gas 35% Europe Power Chemical World Area Sales Industry Sales

7 2007 Worldwide Process Automation $33 Billion Served Market This slide has been omitted

8 Total Process Market by Industry 2000 to 2007 Metals & Other Mining 9% Life Science 5% 21% Water & Waste Food & Beverage 7% 6% 9% Pulp & Paper 9% 9% Refining 10% 15% Oil & Gas Chemical Power Water & Waste Life Science Pulp & Paper Food & Beverage Metals & Mining 6% 6% 7% 7% 6% 18% 8% Other 12% Refining 15% Chemical 15% Power Oil & Gas 2000 Market Size = $23B 5.3%CAGR 2007 Market Size = $33B Source: ARC, Western Research, RSR

9 Process Industry Mega-Trends Will Continue to Drive Growth in End Markets Investment boom and growing wealth in major emerging economies Growing global demand for energy and commodities New technologies becoming viable (regasification, deepwater drilling & LNG) Escalating Need for Process Automation Environmental concerns and depleting natural resources Increased emphasis on safety Workforce demographics and shortage of skilled labor Market Dynamics Support Through the Cycle Growth of 5-7%

10 Energy Demand will Increase 30% by 2020 (TJ) Energy Forecast by Type Biomass & Other Hydro Nuclear Gas Coal Oil Source: OECD/IEA World Energy Outlook

11 Chemical Center of Gravity Shifting Rapidly to Asia and the Middle East New Capacities Announced for the Period MT +9.2 MT North America +8.5 MT +41 MT Europe Asia Pacific MT Middle East Rest of World Majors (BP, Shell, Exxon, CPC, Dow, Total) Asian Companies Middle East Companies Others Source: Dubai Petrochemical Conference

12 High Commodity Prices are Driving Record Investment in Metals & Mining Global Base, Precious Metals & Steel Demand Indexes Recent Key Wins Name Location Value Alcan Gove Australia $10M Konkola Mines Zambia $8M Ivanhoe Mines Mongolia $6M Ravensthorpe Australia $5M Aluminum Platinum Nickel Palladium Copper Steel Source: Barclays Capital, CRU, Brook Hunt ILZSG and Hatch Beddows

13 Key Messages We continue our run with record breaking orders, sales, profitability and returns We are the largest, broadest and most geographically balanced supplier of process automation and our markets remain strong PlantWeb changed the industry and wireless technology will widen our lead -- another Game- Changer for our customers Emerson adds value in everything from managing the most sophisticated projects to fulfilling the dayto-day, quick-delivery MRO requirements

14 PlantWeb is Predictive Intelligence Digital Controls Lets you make decisions to optimize production and availability Machinery Health Detects vibration and provides lube oil analysis to detect premature wear helping prevent mechanical failure Digital Valves Tells you of wear, installation issues or process variations that may cause service interruption and tells you how to correct Measurement Devices Warns you of a plugged impulse line with time to correct and avoid a shutdown

15 2007 Major PlantWeb Project Wins This slide has been omitted

16 Solomon Associates have Documented PlantWeb s s Operational Benefits World s leading process plant benchmarking firm studied an Emerson PlantWeb refinery installation Comprehensive data was collected 30 months pre-project and 24 months post-project Rigorous data collection, validation and analysis was performed on multiple process units High Failure Severity Low Gulf Coast Refinery Pre & Post PlantWeb Installation Lines of Constant Risk 1 Overall More than 2 Times Reductions in Operational Risk after the PlantWeb Installation! Less Failure Frequency X Pre-Installation Post-Installation Risk Factor More Source:

17 The Age of Wireless Provides the Eyes and Ears to Move Facilities to the Next Higher Level Smart Wireless Smart Control Systems Smart Analytical Smart Asset Optimization Smart Measurement Smart Final Control Smart Machinery Health Smart Safety Mobile Worker Workforce Tracking Video Voice over IP (VoIP)

18 We Offer the Widest Portfolio of Wireless Products in the Industry Smart Wireless Global Launches Pressure Multi-point Temperature Discrete Temperature Gas Specific Level Gas & Liquid Gravity Analysis Radar Level Wireless Gateway Flow Vibration Density / Viscosity Oil & Gas Remote Control Device Stranded Diagnostics Field Device Communicator Level Switch Valve Positioners Asset Management Software North America 10/06 Europe 1/07 Singapore 6/07 Malaysia 7/07 Australia 8/07 Venezuela 8/07 NA (Phase 2) 9/07 China 9/07 Argentina 10/07 EUR (Phase 2) 11/07 Brazil 11/07 Thailand 11/07 India 12/07 Mexico 12/07 Middle East 3/08 WirelessHART Standard ratified in September 2007! Shipping Now Shipping 2008

19 Customers Are Solving Real Plant Problems: StatoilHydro Grane Platform Application: Monitoring wellhead annular pressure and heat exchanger pressures Smart Wireless delivered 100% reliability & stability in the crowded metal wellhead environment Customer identified operational improvements as a result of increased process visibility Wireless solution eliminated the need for daily visits to the wellhead to manually record gauge readings Continuous monitoring enables abnormal readings to be identified earlier We are delighted with the performance of the Emerson Smart Wireless network in these challenging conditions. our instrument engineers are very confident about adding more wireless devices to our installation. [Wireless installs] typically take around two hours to install compared with up to two days for a conventional wired unit. Geir Leon Vadheim, Instrument Lead, Grane Platform

20 Customers are Experiencing the Benefits of Wireless: Large NA Refining Facility Manual methods of monitoring Volatile Organic Compound (VOC) emissions through pressure relief valves cost major refinery $350,000 in fines Wired solution impractical for monitoring pressure relief valves in large facility Refinery improved environmental compliance and reduced costs with Smart Wireless Solution Eliminated false VOC emission reports Minimized fines for VOC emissions through more accurate reporting True time and rate calculations for brief emissions that previously were assumed at maximum rate for 12 hours Prevents VOC emissions through timely operator intervention Eliminates manual logs for compliance reporting

21 Key Messages We continue our run with record breaking orders, sales, profitability and returns We are the largest, broadest and most geographically balanced supplier of process automation and our markets remain strong PlantWeb changed the industry and wireless technology will widen our lead -- another Game- Changer for our customers Emerson adds value in everything from managing the most sophisticated projects to fulfilling the dayto-day, quick-delivery MRO requirements

22 Over the Last 12 Years, Emerson has Invested in Building a Strong Global Solutions Capability Project Planning & Management Project Engineering Plant Start-up & Commissioning Process & Asset Optimization Emerson Process is now the preferred Main Automation Contractor (MAC) for the largest and most demanding projects worldwide

23 Emerson has the Broadest Offering for Process Industry MAC Projects This slide has been omitted

24 Emerson Process Management Executing the Largest Projects in the World This slide has been omitted

25 Our Project Execution Capabilities are Unmatched This slide has been omitted

26 Saudi Polymers Company National Chevron Phillips Project New petrochemical plant for ethylene, polyethylene, polypropylene, hexane and polystyrene 50:50 joint venture between Chevron Phillips and Saudi Industrial Investment Group Emerson scope: Main Automation Contractor Value to Emerson: ~$110M

27 MRO and Services Generate Value and Steady Revenue Stream This slide has been omitted

28 Coffeyville Resources Refinery Flooding A major flood resulted in substantial damage and repair work scope that could take up to 6 months Emerson scope included project management, repairing 914 instruments, and rebuilding over 650 valve actuators Emerson was able to complete the instrumentation repair and commissioning in 6 weeks Coffeyville Resources Refinery during flood The repair also gave an opportunity to install new technology and build a foundation for ongoing PlantWeb predictive maintenance Emerson accomplished the impossible! - Coffeyville Engineering Manager

29 Process Management Key Messages We continue our run with record breaking orders, sales, profitability and returns We are the largest, broadest and most geographically balanced supplier of process automation and our markets remain strong PlantWeb changed the industry and wireless technology will widen our lead -- another Game-Changer for our customers Emerson adds value in everything from managing the most sophisticated projects to fulfilling the day-to-day, quickdelivery MRO requirements E Reported Sales Growth 17% 12-15% Underlying Sales Growth* 11% 10-12% EBIT Margin 18.7% basis pts