Analysis of Geographic Areas
Emerson Electric Co. operates in 3 regions: Americas; Asia, Middle East & Africa; and Europe.
Area Asset Turnover
Emerson Electric Co., asset turnover by geographic area
| Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | |
|---|---|---|---|---|---|---|
| Americas | 4.32 | 4.25 | 4.20 | 4.21 | 5.34 | 5.45 |
| Asia, Middle East & Africa | 7.58 | 7.73 | 6.58 | 7.57 | 10.28 | 10.58 |
| Europe | 5.04 | 4.29 | 3.89 | 5.29 | 5.49 | 6.00 |
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
A comprehensive review of geographic area asset turnover from 2014 to 2019 reveals a general decline in asset efficiency across all reporting regions during the first half of the period, followed by a phase of stabilization or recovery starting in 2018.
- Americas
- Asset turnover in the Americas began at 5.45 in 2014 and experienced a notable contraction between 2015 and 2016, falling from 5.34 to 4.21. Following this decline, the ratio remained relatively stagnant, fluctuating minimally between 4.20 and 4.32 through 2019. This suggests a permanent shift in the asset-to-revenue relationship within the region after 2015.
- Asia, Middle East & Africa
- This region consistently demonstrated the highest asset turnover of all geographic areas, peaking at 10.58 in 2014. A significant downward trend was observed through 2017, where the ratio reached a period low of 6.58. However, efficiency improved in 2018 to 7.73 before settling at 7.58 in 2019. Despite the volatility, the region maintained a superior ability to generate revenue from its asset base compared to other territories.
- Europe
- The European region exhibited a consistent decline from 6.00 in 2014 to a low of 3.89 in 2017. Unlike the Americas, Europe showed a strong recovery trend in the subsequent years, with the ratio climbing to 4.29 in 2018 and returning to 5.04 by 2019. This recovery indicates a successful improvement in asset utilization or a strategic realignment of the regional asset base.
Across all three regions, the year 2017 represented a critical inflection point, marking the lowest efficiency levels for Asia, Middle East & Africa and Europe, and the near-bottom for the Americas. The subsequent trend indicates a global effort toward stabilizing asset productivity, most notably in the European market.
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Area Asset Turnover: Americas
Emerson Electric Co.; Americas; area asset turnover calculation
| Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales | 10,103) | 9,484) | 8,632) | 8,339) | 11,914) | 12,770) |
| Property, plant and equipment | 2,339) | 2,234) | 2,055) | 1,983) | 2,233) | 2,342) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 4.32 | 4.25 | 4.20 | 4.21 | 5.34 | 5.45 |
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
1 2019 Calculation
Area asset turnover = Sales ÷ Property, plant and equipment
= 10,103 ÷ 2,339 = 4.32
The financial performance of the Americas region is characterized by a sharp contraction in sales and asset efficiency during the first half of the observed period, followed by a steady recovery phase. The most significant volatility occurred between 2015 and 2016, which established a new baseline for operational turnover.
- Sales Trends
- Revenue in the Americas experienced a substantial decline, falling from 12,770 million US dollars in 2014 to a low of 8,339 million US dollars in 2016. Following this trough, a consistent upward trajectory was observed, with sales recovering to 10,103 million US dollars by September 30, 2019.
- Property, Plant, and Equipment (PP&E)
- Asset investment patterns mirrored the sales trend. PP&E decreased from 2,342 million US dollars in 2014 to 1,983 million US dollars in 2016. From 2017 onward, there was a steady reinvestment in fixed assets, returning to 2,339 million US dollars by 2019, nearly reaching 2014 levels.
- Area Asset Turnover Efficiency
- The asset turnover ratio exhibited a notable decline from 5.45 in 2014 to 4.21 in 2016. This indicates that the reduction in sales outpaced the reduction in fixed assets during the contraction phase. From 2017 to 2019, the ratio stabilized and began a marginal recovery, reaching 4.32 by the end of the period, suggesting a gradual improvement in the efficiency of asset utilization to generate revenue.
Overall, while the region has regained significant revenue and reinvested in its asset base, the asset turnover efficiency has not yet returned to the peak levels observed in 2014 and 2015.
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Area Asset Turnover: Asia, Middle East & Africa
Emerson Electric Co.; Asia, Middle East & Africa; area asset turnover calculation
| Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales | 5,083) | 5,041) | 4,209) | 3,883) | 6,366) | 6,952) |
| Property, plant and equipment | 671) | 652) | 640) | 513) | 619) | 657) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 7.58 | 7.73 | 6.58 | 7.57 | 10.28 | 10.58 |
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
1 2019 Calculation
Area asset turnover = Sales ÷ Property, plant and equipment
= 5,083 ÷ 671 = 7.58
The financial performance of the Asia, Middle East, and Africa geographic area between 2014 and 2019 is characterized by a significant contraction in sales followed by a partial recovery, which directly impacted the efficiency of asset utilization.
- Sales Revenue Trends
- A substantial decline in sales is observed from September 30, 2014, to September 30, 2016, where revenue dropped from 6,952 million US$ to 3,883 million US$. This represents a peak-to-trough decrease of approximately 44%. Following this low point, a steady recovery trend emerged, with sales increasing to 5,083 million US$ by September 30, 2019, although figures remained below 2014 levels.
- Property, Plant, and Equipment (PP&E) Movements
- Investment in fixed assets showed relative stability compared to the volatility of sales. PP&E decreased from 657 million US$ in 2014 to a low of 513 million US$ in 2016. Subsequently, asset levels were scaled back up, reaching 671 million US$ by 2019. The growth in PP&E from 2017 onwards suggests a strategic reinvestment in the region to support the recovery in sales.
- Area Asset Turnover Efficiency
- The area asset turnover ratio exhibited a downward trend during the first half of the period, falling from a high of 10.58 in 2014 to a minimum of 6.58 in 2017. This decline indicates that the reduction in sales far outpaced the reduction in fixed assets, leading to decreased operational efficiency. Between 2017 and 2019, the ratio stabilized, rebounding to 7.73 in 2018 before settling at 7.58 in 2019, suggesting a normalization of asset productivity relative to the recovered revenue stream.
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Area Asset Turnover: Europe
Emerson Electric Co.; Europe; area asset turnover calculation
| Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales | 3,185) | 2,898) | 2,434) | 2,300) | 4,024) | 4,815) |
| Property, plant and equipment | 632) | 676) | 626) | 435) | 733) | 803) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 5.04 | 4.29 | 3.89 | 5.29 | 5.49 | 6.00 |
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
1 2019 Calculation
Area asset turnover = Sales ÷ Property, plant and equipment
= 3,185 ÷ 632 = 5.04
Between 2014 and 2019, the European operations exhibited significant volatility in both revenue generation and asset utilization. A period of contraction occurred mid-cycle, followed by a gradual recovery in sales and operational efficiency.
- Sales Performance
- Revenue experienced a substantial decline from US$ 4,815 million in 2014 to a trough of US$ 2,300 million in 2016. Subsequent years showed a consistent recovery trend, with annual increases leading to a value of US$ 3,185 million by September 30, 2019.
- Property, Plant, and Equipment (PP&E) Trends
- The asset base underwent a significant reduction between 2014 and 2016, decreasing from US$ 803 million to US$ 435 million. This was followed by a period of expansion through 2018, where PP&E reached US$ 676 million, before slightly contracting to US$ 632 million in 2019.
- Area Asset Turnover Analysis
- The area asset turnover ratio trended downward for the first four years of the period, falling from 6.00 in 2014 to a low of 3.89 in 2017. This indicates that the reduction in the asset base was not sufficient to offset the more rapid decline in sales during that interval. A recovery in efficiency was observed from 2018 onward, with the ratio improving to 5.04 by 2019, reflecting a more effective alignment between the asset base and revenue generation.
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Sales
Emerson Electric Co., sales by geographic area
US$ in millions
| Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | |
|---|---|---|---|---|---|---|
| Americas | 10,103) | 9,484) | 8,632) | 8,339) | 11,914) | 12,770) |
| Asia, Middle East & Africa | 5,083) | 5,041) | 4,209) | 3,883) | 6,366) | 6,952) |
| Europe | 3,185) | 2,898) | 2,434) | 2,300) | 4,024) | 4,815) |
| Total | 18,371) | 17,423) | 15,275) | 14,522) | 22,304) | 24,537) |
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
Total sales experienced a significant contraction between 2014 and 2016, reaching a nadir of 14,522 million US dollars in 2016. Following this period, a consistent upward trajectory was observed through 2019, with total revenue recovering to 18,371 million US dollars. Despite this recovery, total sales remained approximately 25% below 2014 levels by the end of the period.
- Americas Market Performance
- The Americas region remained the primary revenue driver throughout the analyzed period. Sales in this segment decreased from 12,770 million US dollars in 2014 to a low of 8,339 million US dollars in 2016. A subsequent recovery trend saw revenues climb to 10,103 million US dollars by 2019, maintaining the region's position as the largest geographic contributor to total sales.
- Asia, Middle East & Africa Segment
- This region exhibited substantial volatility, with sales falling from 6,952 million US dollars in 2014 to 3,883 million US dollars in 2016. While a gradual recovery was observed from 2017 onward, reaching 5,083 million US dollars in 2019, the segment did not return to its 2014 or 2015 performance levels.
- European Market Dynamics
- Europe represented the smallest share of total sales and mirrored the overall corporate trend of a steep decline followed by a moderate recovery. Revenue dropped from 4,815 million US dollars in 2014 to 2,300 million US dollars in 2016, eventually recovering to 3,185 million US dollars by 2019.
- Geographic Trend Correlation
- The synchronized decline across all three geographic regions in 2016 indicates systemic factors affecting global operations. The subsequent recovery since 2017 has been uniform across all territories, although the magnitude of recovery varied, with the Americas showing the strongest absolute growth in recovered revenue.
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Property, plant and equipment
Emerson Electric Co., property, plant and equipment by geographic area
US$ in millions
| Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | |
|---|---|---|---|---|---|---|
| Americas | 2,339) | 2,234) | 2,055) | 1,983) | 2,233) | 2,342) |
| Asia, Middle East & Africa | 671) | 652) | 640) | 513) | 619) | 657) |
| Europe | 632) | 676) | 626) | 435) | 733) | 803) |
| Total | 3,642) | 3,562) | 3,321) | 2,931) | 3,585) | 3,802) |
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
The overall investment in property, plant, and equipment across all geographic segments experienced a notable contraction between 2014 and 2016, followed by a consistent recovery phase through 2019. Total assets in this category decreased from US$ 3,802 million in 2014 to a minimum of US$ 2,931 million in 2016, before ascending to US$ 3,642 million by the end of the analyzed period.
- Americas Asset Trends
- The Americas region maintains the largest proportion of property, plant, and equipment. A downward trend was observed from 2014 to 2016, with values falling from US$ 2,342 million to US$ 1,983 million. Subsequently, a steady recovery occurred, with assets increasing annually to reach US$ 2,339 million by September 30, 2019, nearly returning to initial 2014 levels.
- Asia, Middle East, and Africa Asset Trends
- Investment in the Asia, Middle East, and Africa region mirrored the global trend, reaching a low of US$ 513 million in 2016. From 2017 onward, a consistent growth pattern emerged, resulting in a final valuation of US$ 671 million in 2019, which represents a net increase over the 2014 starting value of US$ 657 million.
- Europe Asset Trends
- The European segment demonstrated the highest relative volatility. Property, plant, and equipment values declined sharply from US$ 803 million in 2014 to US$ 435 million in 2016. Although a recovery was observed through 2018, peaking at US$ 676 million, the trend reversed slightly in 2019, with values declining to US$ 632 million.
- Aggregate Geographic Analysis
- The synchronization of the decline across all three geographic regions in 2016 suggests a systemic reduction in fixed assets or a strategic global realignment. While the Americas remain the dominant region in terms of asset concentration, the Asia, Middle East, and Africa region is the only segment to end the period with a higher asset value than that recorded in 2014.
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