2013 Investor Conference2013 Investor Conference · 2013. 7. 15. · 2013 Investor Conference2013...

2013 Investor Conference2013 Investor Conference2013 Investor Conference2013 Investor ConferenceEmerson OverviewEmerson OverviewDavid N. FarrDavid N. Farr

Chairman and Chief Executive Officer

February 11 2013February 11, 2013Safe 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

Non-GAAP Measures

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 and subsequent reports 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 www.emerson.comunder the investor relations tab.

Investor Conference Investor Conference –– AgendaAgendaMonday, February 11, 2013Monday, February 11, 2013Investor Conference Investor Conference –– AgendaAgendaMonday, February 11, 2013Monday, February 11, 2013Monday, February 11, 2013Monday, February 11, 2013Monday, February 11, 2013Monday, February 11, 2013Time Title Presenter

3:00 – 5:00pm Emerson Overview D. N. Farr

5:00 – 5:45pm Network Power Systems Overview D. S. Barbour

5:45 – 6:15pm Q&A

6 15 6 45 C kt il6:15 – 6:45pm Cocktails

6:45pm Dinner

3

Investor Conference Investor Conference –– AgendaAgendaTuesday, February 12, 2013Tuesday, February 12, 2013Investor Conference Investor Conference –– AgendaAgendaTuesday, February 12, 2013Tuesday, February 12, 2013Tuesday, February 12, 2013Tuesday, February 12, 2013Tuesday, February 12, 2013Tuesday, February 12, 2013

7:00AM - 8:00AM BREAKFASTGROUP A GROUP B

8:00AM - 8:30AMTravel to Delaware

Depart for Learning Center8:30AM - 9:00AM Global Service Overview

Group A1 Group A2 Group B1 Group B29:00AM - 9:15AM

DCIM Lab Technology/FWTMonitoring Center Training Floor

9:15AM - 9:30AM Training Floor Monitoring Center9:30AM - 10:00AM Technology/FWT DCIM Lab

Travel to Delaware10 00AM 10 30AM10:00AM - 10:30AM

Travel to Learning Center Group B1 Group B210:30AM - 11:00AM DCIM Lab Technology/FWT11:00AM - 11:30AM Global Service Overview11:00AM - 11:30AM Global Service Overview

Technology/FWT DCIM LabGroup A1 Group A2

11:30AM - 11:45AM Monitoring Center Training FloorTravel to Hotel11:45AM - 12:00PM Training Floor Monitoring Centerg g

12:00PM – 12:30PM Travel to Hotel12:30PM – 1:30PM LUNCH

4

Investor ConferenceInvestor Conference –– Emerson AttendeesEmerson AttendeesInvestor ConferenceInvestor Conference –– Emerson AttendeesEmerson AttendeesInvestor Conference Investor Conference Emerson AttendeesEmerson AttendeesInvestor Conference Investor Conference Emerson AttendeesEmerson AttendeesCorporate

David Farr Chairman and Chief Executive OfficerCraig Ashmore Executive Vice President – Planning and DevelopmentFrank Dellaquila Executive Vice President and Chief Financial OfficerEd Monser President and Chief Operating OfficerCharlie Peters Senior Executive Vice PresidentKathy Button Bell Vice President and Chief Marketing OfficerPat Fitzgerald Director – Investor RelationsLal Karsanbhai Vice President – Planning

Network Power SystemsScott Barbour Executive Vice PresidentScott Barbour Executive Vice PresidentFrank Bibens President – Global ServicesSteve Hassell President – AvocentL M i Vi P id t Pl i d D l t

5

Lynne Maxeiner Vice President – Planning and DevelopmentChuck Spears President Network Power Sales AmericasArmand Visioli President – ASCO Power Technologies

Emerson Experienced a Strong Start to Fiscal Emerson Experienced a Strong Start to Fiscal 20132013Emerson Experienced a Strong Start to Fiscal Emerson Experienced a Strong Start to Fiscal 201320132013201320132013

Q1 2012 Q1 2013Q1 2013 vs.

Q1 2012Sales $5.3B $5.6B 4.6%

GP Margin 38.7% 39.7% +1.0 pts

5.6% Underlying Sales Growth*

OP Margin* 13.2% 14.6% +1.4 pts

EBIT* $611 $727 19.1%

% f S l * 11 5% 13 1% +1 6 t% of Sales* 11.5% 13.1% +1.6 pts

Operating Cash Flow $334M $554M 65.7%

Free Cash Flow* $204M $439M 114.7%Free Cash Flow $204M $439M 114.7%

EPS $0.50 $0.62 24.0%

DPS $0.40 $0.41 2.5%

6

Emerson Had a Very Strong First Quarter in 2013, Which Will Help Us to Achieve Our Fiscal Year Targets

6

Underlying Orders TrendsUnderlying Orders TrendsTrailing 3Trailing 3--Month Average vs. Prior YearMonth Average vs. Prior YearUnderlying Orders TrendsUnderlying Orders TrendsTrailing 3Trailing 3--Month Average vs. Prior YearMonth Average vs. Prior YearTrailing 3Trailing 3 Month Average vs. Prior YearMonth Average vs. Prior YearTrailing 3Trailing 3 Month Average vs. Prior YearMonth Average vs. Prior Year

This slide has been omitted

7

Fiscal 2013 Financial ExpectationsFiscal 2013 Financial ExpectationsFiscal 2013 Financial ExpectationsFiscal 2013 Financial ExpectationsFiscal 2013 Financial ExpectationsFiscal 2013 Financial ExpectationsFiscal 2013 Financial ExpectationsFiscal 2013 Financial Expectations

Operational Performance 2013E DeltaPerformance

20122013E Delta

Sales $24.4B $25.0 - $25.6B 2% - 5%

GP Margin 40.0% ~40.5% ~50 bps

^

GP Margin 40.0% 40.5% 50 bps

OP Margin* 17.7% 17.8% - 17.9% 10-20 bps

EBIT* $3.9B ~$4.1B ~5%

% of Sales* 16.1% 16.2% - 16.3% 10-20 bps

Operating Cash Flow $3.1B ~$3.35B ~9%

Free Cash Flow* $2.4B ~$2.65B ~10%

EPS $3.39 $3.53-$3.63 4% - 7%

ROTC 19.4% ~20% ~60 bps

8^Operational Performance*: Excluding goodwill impairment of $592M pretax or $0.72 per share in 2012

Remember: We Still Expect 70-80% of 2013 EPS Growth in the First Half

2013 Outlook2013 Outlook –– Key Highlights to Drive ValueKey Highlights to Drive Value2013 Outlook2013 Outlook –– Key Highlights to Drive ValueKey Highlights to Drive Value2013 Outlook 2013 Outlook Key Highlights to Drive ValueKey Highlights to Drive Value2013 Outlook 2013 Outlook Key Highlights to Drive ValueKey Highlights to Drive Value● Global Gross Fixed Investment (GFI) is Forecasted to Grow

Only 3-5% in 2013, but this could be optimistic● This will lead to a 2-5% Underlying Sales* Growth in 2013,

with minimal acquisitions in plan● Positive order trends suggest several of our businesses –gg

Process Management, Climate Technologies, Commercial & Residential Solutions – Should Experience Solid Underlying Growth

● Another Record Year for Profit Margins is expected – as we expect all time highs in Gross and Operating Profit Margins

● Significant Cash Flow Improvement is expected to occur –● Significant Cash Flow Improvement is expected to occur producing an incremental gain of $200-$300M in Free Cash Flow*, after a weak Fiscal 2012

9

Underlying Global Economics Have Underlying Global Economics Have Softened in 2012/2013 But Solid Pockets Softened in 2012/2013 But Solid Pockets of Growth Still Existof Growth Still Exist

Underlying Global Economics Have Underlying Global Economics Have Softened in 2012/2013 But Solid Pockets Softened in 2012/2013 But Solid Pockets of Growth Still Existof Growth Still Existof Growth Still Existof Growth Still Existof Growth Still Existof Growth Still Exist

GFI % Change GFI 2012/13E2010/2011 2011/2012 GFI 2013E $ Real Growth

United States 3.0% 6.1% $2.6T 3-5%R id ti l (3 8%) 9 3% $0 5T 13 15%Residential (3.8%) 9.3% $0.5T 13-15%Non-Residential (8.0%) 9.2% $1.7T 2-4%

Western Europe 1.6% (1.7%) $2.8T (2%)-(1%)Australia / New Zealand 5.1% 8.6% $0.5T 4-6%Japan 0.3% 5.7% $1.3T 1-2%Canada 6.6% 3.1% $0.4T 2-4%Mature Markets 2.2% 2.7% $7.6T 1-3%

Emerging Asia 7.5% 5.9% $5.8T 4-6%China 9.5% 7.5% $3.9T 5-7%India 5.5% 3.4% $0.6T 3-5%

Eastern Europe / Russia 9 8% 4 3% $1 1T 2 3%Eastern Europe / Russia 9.8% 4.3% $1.1T 2-3%Latin America 10.1% 3.6% $1.2T 4-5%Middle East and Africa 6.8% 5.5% $0.5T 2-4%Emerging Markets 8.2% 5.3% $8.6T 3-5%

10Source: IHS Global Insight and Emerson assessment 10

World GFI GrowthEmerson Underlying Sales* Growth

4.7%11%

3.8%3%

3-5%2-5%

United StatesUnited States Gross Fixed InvestmentGross Fixed InvestmentUnited StatesUnited States Gross Fixed InvestmentGross Fixed InvestmentUnited StatesUnited States Gross Fixed InvestmentGross Fixed InvestmentUnited StatesUnited States Gross Fixed InvestmentGross Fixed Investment

14%

16%2012 2013E

Non-Residential GFI

10%

12%

14%Residential GFI

o es de t a GResidential GFI: 13% - 15%

4%

6%

8%

Non Residential GFI: 2% 4%

0%

2%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Non-Residential GFI: 2% - 4%

Residential GFI 9.3% 13-15%Non-residential GFI 9.2% 2-4%Total US GFI 6.1% 3-5%

11Source: IHS Global Insight

United States Residential Market Is Expected to Be Stronger in 2013 and Non-Residential Markets Will be Weaker

Underlying Global Economics Have Underlying Global Economics Have Softened in 2012/2013 But Solid Pockets Softened in 2012/2013 But Solid Pockets of Growth Still Existof Growth Still Exist

Underlying Global Economics Have Underlying Global Economics Have Softened in 2012/2013 But Solid Pockets Softened in 2012/2013 But Solid Pockets of Growth Still Existof Growth Still Existof Growth Still Existof Growth Still Existof Growth Still Existof Growth Still Exist

GFI % Change GFI 2012/13E2010/2011 2011/2012 GFI 2013E $ Real Growth

United States 3.0% 6.1% $2.6T 3-5%R id ti l (3 8%) 9 3% $0 5T 13 15%Residential (3.8%) 9.3% $0.5T 13-15%Non-Residential (8.0%) 9.2% $1.7T 2-4%

Western Europe 1.6% (1.7%) $2.8T (2%)-(1%)Australia / New Zealand 5.1% 8.6% $0.5T 4-6%Japan 0.3% 5.7% $1.3T 1-2%Canada 6.6% 3.1% $0.4T 2-4%Mature Markets 2.2% 2.7% $7.6T 1-3%

Emerging Asia 7.5% 5.9% $5.8T 4-6%China 9.5% 7.5% $3.9T 5-7%India 5.5% 3.4% $0.6T 3-5%

Eastern Europe / Russia 9 8% 4 3% $1 1T 2 3%Eastern Europe / Russia 9.8% 4.3% $1.1T 2-3%Latin America 10.1% 3.6% $1.2T 4-5%Middle East and Africa 6.8% 5.5% $0.5T 2-4%Emerging Markets 8.2% 5.3% $8.6T 3-5%

Source: IHS Global Insight and Emerson assessment

World GFI GrowthEmerson Underlying Sales* Growth

4.7%11%

3.8%3%

3-5%2-5%

12

Western EuropeWestern Europe Gross Fixed InvestmentGross Fixed InvestmentWestern EuropeWestern Europe Gross Fixed InvestmentGross Fixed InvestmentWestern EuropeWestern Europe Gross Fixed InvestmentGross Fixed InvestmentWestern EuropeWestern Europe Gross Fixed InvestmentGross Fixed Investment

4%2012 2013E

2%

-2%

0%

(2%) – (1%)

-4%Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Western Europe GFI (1.7%) (2%) – (1%)

Source: IHS Global Insight

Western Europe Will Continue to Struggle in 2013, But Slight Improvements are Starting to Show Up

13

The Global Material Inflation Trends and The Global Material Inflation Trends and Emerson’s ActionsEmerson’s Actions –– Expect to Be Green in 2013Expect to Be Green in 2013The Global Material Inflation Trends and The Global Material Inflation Trends and Emerson’s ActionsEmerson’s Actions –– Expect to Be Green in 2013Expect to Be Green in 2013

3%

4% Price %Net Material Inflation %

Emerson s Actions Emerson s Actions Expect to Be Green in 2013 Expect to Be Green in 2013 Emerson s Actions Emerson s Actions Expect to Be Green in 2013 Expect to Be Green in 2013 Emerson Net Material Inflation vs. Price

?

1%

2%

Flat to (0 5%)

?

?

(1%)

0% (0.5%)

(4%)

(3%)

(2%)

Deflation Period

(1.5%) to (2.0%)

Deflation Period

∆Price & NMI

(4%)2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014F 2015F

Period

Neutral

Period

We Will See Flat to Slightly Down Price in Fiscal 2013, and the Net Material Inflation will be Negative (1.5%) to (2.0%). However, We are Concerned

That Inflation Could Start to Emerge in Late 2013 or Early 201414

During Significant Deflation Points of Inflection, During Significant Deflation Points of Inflection, it is Normally a Challenge to Remain Net Green it is Normally a Challenge to Remain Net Green (Price vs. Material Inflation)(Price vs. Material Inflation)

During Significant Deflation Points of Inflection, During Significant Deflation Points of Inflection, it is Normally a Challenge to Remain Net Green it is Normally a Challenge to Remain Net Green (Price vs. Material Inflation)(Price vs. Material Inflation)(Price vs. Material Inflation) (Price vs. Material Inflation) (Price vs. Material Inflation) (Price vs. Material Inflation)

20%

World Producer Price Index (PPI) Year-over-Year Change

10%

15% Inflection Point?

5%

10%

-5%

0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42010 2011 2012 2013E

PPI 6.3% 11.1% (0.2%) 1.2% 1.5% - 2.5% 3.0% - 5.0%

2014F 2015F

Price Cost Deflation Will Put Price Pressure on Emerson in 2013 Versus 2011 and 2012

15

Creating LongCreating Long TermTerm Value at Emerson:Value at Emerson: Still ValidStill ValidCreating LongCreating Long TermTerm Value at Emerson:Value at Emerson: Still ValidStill ValidCreating Long Creating Long Term Term Value at Emerson: Value at Emerson: Still ValidStill ValidCreating Long Creating Long Term Term Value at Emerson: Value at Emerson: Still ValidStill ValidShare

RepurchaseProfit

Growth

ROTCEBIT Margin

14 - 18+%Drives EPS

$5BAcquisitions

ROTCTarget 15 - 25%

14 - 18+%OP Margin15 - 19+%

EPS 10 - 13% CAGR

Operating Capital Efficiency• Trade Working Capital –

Underlying Sales

Growth

Historical Gross Fixed Investment Growth TrendsHistorical Gross Fixed Investment Growth TrendsHistorical Gross Fixed Investment Growth TrendsHistorical Gross Fixed Investment Growth TrendsHistorical Gross Fixed Investment Growth TrendsHistorical Gross Fixed Investment Growth TrendsHistorical Gross Fixed Investment Growth TrendsHistorical Gross Fixed Investment Growth Trends

GFI Growth

Periods with HighGrowth Rates

8%

10%

Average GFI Growth: 5.2%

Average GFI Growth: 6.4%

6%

8%

“Slower Global Recovery”

2012-2015F CAGR: 3-5%

RecessionAverage: 3% to 4%

Recession2%

4%

0%1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E2014F 2015F1995 2000 2003 2008 20152010

World GFI Growth Rates Have Slowed Down in 2012. A Lower Growth Environment is Expected Over the Next Three Years.

This Drives a Modified Near-Term Value Creation Chart Source: Global Insight and Emerson assessment 17

Creating Long Creating Long Term Term Value at Emerson in the Value at Emerson in the NearNear--Term with a Lower Growth EnvironmentTerm with a Lower Growth EnvironmentCreating Long Creating Long Term Term Value at Emerson in the Value at Emerson in the NearNear--Term with a Lower Growth EnvironmentTerm with a Lower Growth EnvironmentNearNear Term with a Lower Growth EnvironmentTerm with a Lower Growth EnvironmentNearNear Term with a Lower Growth EnvironmentTerm with a Lower Growth Environment

Share RepurchaseProfit

Lower Sales Growth Will Slightly Dampen Our Traditional

EPS and ROTC Targets

ROTC

RepurchaseProfitGrowth


Acquisitions

Target 18 - 22%EBIT Margin~17.5%

OP Margin~19%

Drives EPS 7 - 9% CAGR


2012 2012 --2015F Global Gross Fixed (GFI) Investment 2015F Global Gross Fixed (GFI) Investment Growth TrendsGrowth Trends2012 2012 --2015F Global Gross Fixed (GFI) Investment 2015F Global Gross Fixed (GFI) Investment Growth TrendsGrowth Trends

2-4%

Growth TrendsGrowth TrendsGrowth TrendsGrowth Trends

United StatesMATURE 2 4%2-4%

0-2%Western Europe

United States

Canada

MATURE

Mature2-3%

1-3%

3-5%

3-5%Eastern Europe / Russia

Japan

EMERGING

Australia & New Zealand

3 5%

5-7%

3-5%

p

Emerging Asia

Latin America

EMERGING

Emerging 4-6%

3-5%

5-7%

Middle East

Africa

4 6%

3-5%World GFI Growth

Source: IHS Global Insight and EMR assessment 19

Given the Current Economic Environment, We Given the Current Economic Environment, We Expect 2012Expect 2012--2015F Underlying Sales Growth to be 2015F Underlying Sales Growth to be in the 3%in the 3% -- 5% Range5% Range

Given the Current Economic Environment, We Given the Current Economic Environment, We Expect 2012Expect 2012--2015F Underlying Sales Growth to be 2015F Underlying Sales Growth to be in the 3%in the 3% -- 5% Range5% Rangein the 3% in the 3% 5% Range5% Rangein the 3% in the 3% 5% Range5% Range

$30$B

Growth in the Next Three Years Will Be Slower ~$27 4B

$24.2B $24.4B$25~$25.5B

$27.4B

$21.0B

$20 2012 – 2015F: 3-5% Underlying Growth2010 – 2012: 7.7%

$152010-2015F CAGR: 5-7%

$102010 2011 2012 2013E 2015F

2010 2015F CAGR: 5 7%

20

2010-2015F Growth Could Still Be in the 5-7% Range Because of Very Strong 2011 Underlying Growth* of 11%

How Do We Drive to a $27.4B Company by 2015? How Do We Drive to a $27.4B Company by 2015? 20122012 –– 2015: 32015: 3--5% Underlying Growth5% Underlying GrowthHow Do We Drive to a $27.4B Company by 2015? How Do We Drive to a $27.4B Company by 2015? 20122012 –– 2015: 32015: 3--5% Underlying Growth5% Underlying Growth2012 2012 2015: 32015: 3 5% Underlying Growth5% Underlying Growth2012 2012 2015: 32015: 3 5% Underlying Growth5% Underlying Growth

Sales ($B)$29

2012 2015 T t 3 5% G th $2 4

$24.4B$25

$27 2012-2015 Target: 3-5% Growth Internal Strategic

InvestmentsEmerging MarketsMature

~$27.4B

$21

$23MarketsMature

Markets

$17

$19

$13

$15 The Three Key Macro Growth Drivers Within Emerson to Drive ~$3B of

Incremental Sales Over 2012-2015F

21

$112012 2015F

Key Global Investment Trends That Will Drive a Key Global Investment Trends That Will Drive a Lower But Reasonable Level of Fixed InvestmentLower But Reasonable Level of Fixed InvestmentKey Global Investment Trends That Will Drive a Key Global Investment Trends That Will Drive a Lower But Reasonable Level of Fixed InvestmentLower But Reasonable Level of Fixed InvestmentLower But Reasonable Level of Fixed InvestmentLower But Reasonable Level of Fixed InvestmentLower But Reasonable Level of Fixed InvestmentLower But Reasonable Level of Fixed Investment

● North America– Continued recovery of the U.S. residential market and upgrades– Consumers will continue moderate spending levels– Oil & Gas investments both upstream and downstream– Continued reasonable levels of capital spending on automation to

ff t ti ht i kill d l b k toff-set tightening skilled labor market● Asia Pacific

– China has started to increase fixed investments to drive moderate tt b d b d frecovery - pretty broad based so far

– Southeast Asia driven Oil & Gas investments and China recovery– India should see a solid growth year driven by government election

● Europe– Much growth or recovery is not expected, but It has stabilized and

should see better capital investment environment as year progresses and as we move into 2014progresses, and as we move into 2014

22

Emerson Continues to Invest in Countries with Emerson Continues to Invest in Countries with Strong Growth PotentialStrong Growth PotentialEmerson Continues to Invest in Countries with Emerson Continues to Invest in Countries with Strong Growth PotentialStrong Growth PotentialStrong Growth PotentialStrong Growth PotentialStrong Growth PotentialStrong Growth Potential

30%

35%2002-12SalesCAGR

2012EMRSales

2002-12GFI

CAGR

Share of Real (2005 USD) Worldwide Gross Fixed Investment2012Real GFI

20%

25%United States

China20% 16%$3.0B$10.0B 4%

13%0%

$2.0T$2.2T

10%

15% Top EMs (excluding China)

Western Europe

17%$2.1B8%

$3.9B 5%0%

$1.1T

$2.6T

10%

5%

10% Next Tier EMs 5% 10%$2.4B$1.2T

Japan $0.3B 4%(1%)$0.9T

10%

0%1992 2002 2012 Emerson Emerging

Market % of Sales~40%36%19%9%

2015F201220021992

Emerson is Strategically Positioned to Benefit from GFI Growth in Emerging Markets and a Good Recovery in North America

Top EMs: India, Brazil, Russia, MexicoNext Tier EMs: Africa, South Korea, Saudi Arabia, Malaysia, Singapore, UAE, Thailand, Colombia, Poland, Turkey, Czech Rep, Indonesia 23

Key Global Investment Trends That Will Drive a Key Global Investment Trends That Will Drive a Lower But Reasonable Level of Fixed InvestmentLower But Reasonable Level of Fixed InvestmentKey Global Investment Trends That Will Drive a Key Global Investment Trends That Will Drive a Lower But Reasonable Level of Fixed InvestmentLower But Reasonable Level of Fixed InvestmentLower But Reasonable Level of Fixed InvestmentLower But Reasonable Level of Fixed InvestmentLower But Reasonable Level of Fixed InvestmentLower But Reasonable Level of Fixed Investment

● North America– Continued recovery of the U.S. residential market and upgrades– Consumers will continue moderate spending levels– Oil & Gas investments both upstream and downstream– Continued reasonable levels of capital spending on automation to

ff t ti ht i kill d l b k toff-set tightening skilled labor market● Asia Pacific

– China has started to increase fixed investments to drive moderate tt b d b d frecovery - pretty broad based so far

– Southeast Asia driven Oil & Gas investments and China recovery– India should see a solid growth year driven by government election

● Europe– Much growth or recovery is not expected, but It has stabilized and

should see better capital investment environment as year progresses and as we move into 2014

24

progresses, and as we move into 2014

Emerson’s Key NearEmerson’s Key Near--Term Growth Regions Term Growth Regions –– Top PrioritiesTop PrioritiesEmerson’s Key NearEmerson’s Key Near--Term Growth Regions Term Growth Regions –– Top PrioritiesTop PrioritiesTop PrioritiesTop PrioritiesTop PrioritiesTop Priorities

United States& Canada

Huge Growth opportunity remains both upstream and downstream, if Government leaders open up Expanded Oil & Gas Exploration and Canada to U S pipeline

We have good penetration but plenty of t d th h P t hi lik

MatureEmerging

Exploration and Canada to U.S. pipeline. Also U.S. residential housing markets are gaining positive momentum

Mexico room to expand through Partnerships like Pemex: a top growth priority over the next 3 years, as we drive to $1B in salesGreat opportunity for growth as the region i f ll f N t l R d ti dEastern

Europe / Russia

We will take advantage of our strong

is full of Natural Resources and continued infrastructure build out and production expansion to serve Western Europe

China

g ginvestments in the region – We Expect a Good Recovery in 2013 and 2014. We have significant growth penetration left across all emerging markets

25

SoutheastAsia

Significant Oil & Gas and natural resource investments and “balance against China”. Growth across the region should show steady opportunities


Sales ($B)

$27

$292012-2015 Target: 3-5% Growth ~$27.4B

$24.4B

$23

$25

$27 gInternal

Strategic Investments

Emerging MarketsMature

M k t

• Oil & Gas in North AmericaR id ti l M k t

$19

$21Markets

There Will Be Good Growth Available in U.S., Canada some European Markets (Germany / Italy)

• Residential Market Recovery in U.S.

$13

$15

$17

Canada, some European Markets (Germany / Italy) and Australia, as China Recovery takes hold

$11

$13

2012 2015F2010 2012 2010-2012 CAGR 2015F 2012-2015F CAGR

Mature Market Sales

$13.9B $15.7B 6.5% ~$16.7B ~2%

26+1.8B +1.0B

Growth in Mature Markets is Key to Next 3 YearsGrowth in Mature Markets is Key to Next 3 YearsGrowth in Mature Markets is Key to Next 3 YearsGrowth in Mature Markets is Key to Next 3 YearsGrowth in Mature Markets is Key to Next 3 YearsGrowth in Mature Markets is Key to Next 3 YearsGrowth in Mature Markets is Key to Next 3 YearsGrowth in Mature Markets is Key to Next 3 Years● Gross Fixed Investment in Mature Markets will grow

2%-3%, Emerson’s sales should grow slightly above th k t 2 3 %the market: 2-3+%

● Oil & Gas Investments and recovery of residential market in North America will drive significant growthmarket in North America will drive significant growth

● Investments in Shale Gas in Canada will also help the growth (3-Year CAGR: 7%+)growth (3 Year CAGR: 7% )

● No overall growth expected in Western Europe

● Australia should recover growth in 2014 and 2015 as● Australia should recover growth in 2014 and 2015 as China markets recover

27

20102010--2012 Mature Market Sales Were Solid and 2012 Mature Market Sales Were Solid and PositivePositive20102010--2012 Mature Market Sales Were Solid and 2012 Mature Market Sales Were Solid and PositivePositivePositivePositivePositivePositive

2012 Sales

2010-2012

CAGR14% $0 9B

Canada

U.S.

14% $0.9B

5% $3.9B

Western Europe

Japan

5% $10B5% $

7% $0.3B


2010-2012 CAGR

2012 Sales

2012 Sales 2010-2012 CAGRMature Markets $15.7B 6.5%

49% $0.6B

Mature Markets Grew $1.8B Over Just 2 Years and Should Continue to Drive Moderate Growth Over the Next 3 Years – +$1B, Led by U.S. and Canada

28

20122012--2015F Sales in Mature Markets2015F Sales in Mature Markets20122012--2015F Sales in Mature Markets2015F Sales in Mature Markets20122012 2015F Sales in Mature Markets2015F Sales in Mature Markets20122012 2015F Sales in Mature Markets2015F Sales in Mature Markets$18

JapanUnited WesternE CanadaAustralia &

New Zealand ~$16 7B

Sales ($B)

$16

JapanStates Europe

Canada New Zealand $16.7B$15.7B

$12

$14

$10

$12

Mature Markets 2012-2015F CAGR: ~2%

$82015F2012

The United States Will Account for Most of Emerson’s Mature Market Growth Over the Next Three Years – Emerson Will Take Advantage of a

Better U.S. Investment Environment29

United States Will Offer Emerson Excellent United States Will Offer Emerson Excellent Growth Opportunities Through this Global Growth Opportunities Through this Global SlowdownSlowdown

United States Will Offer Emerson Excellent United States Will Offer Emerson Excellent Growth Opportunities Through this Global Growth Opportunities Through this Global SlowdownSlowdownSlowdownSlowdownSlowdownSlowdown

• Strong Investments in UpstreamOil & Gas • Strong Investments in Upstream and Downstream• 3-Year CAGR: 8%+

Residential • U.S. Residential Market isU it d St t Residential MarketU.S. Residential Market is Expected to Recover

• 3-Year CAGR: 15%+

United States

Industrial • Reasonable Levels of Capital

30

Reasonable Levels of Capital Spending on Automation

Mature Markets Gross Fixed InvestmentMature Markets Gross Fixed InvestmentMature Markets Gross Fixed InvestmentMature Markets Gross Fixed InvestmentMature Markets Gross Fixed InvestmentMature Markets Gross Fixed InvestmentMature Markets Gross Fixed InvestmentMature Markets Gross Fixed Investment

5% 5% 5% 5%6% 6% 6% 6%

90%

100%

Canada


17% 16% 17% 16%

70%

80% Japan2010-2015F

Change(1 pts)

41% 41% 39% 38%

40%

50%

60% Western Europe2010-2015F

Change

31% 32% 33% 35%20%

30%

40%

United States

(3 pts)

31% 32% 33% 35%

0%

10%

2010 2011 2012 2015F

2010-2015F Change+4 pts

2010 2011 2012 2015F

Source: IHS Global Insight and EMR assessment- 2012 Nominal GFI Base, with Real Growth Rates

Mature GFI $7.2T $7.4T $7.6T0 $8.1T0United States and Canada Should Offer Solid Growth Prospects

31



• Strong Investments in UpstreamOil & Gas • Strong Investments in Upstream and Downstream• 3-Year CAGR: 8%+

Residential • U.S. Residential market isU it d St t Residential MarketU.S. Residential market is expected to recover


United States

Industrial • Reasonable levels of Capital

32

Reasonable levels of Capital Spending on Automation

Oil & Gas Companies are Making Significant Oil & Gas Companies are Making Significant Investments in United States and CanadaInvestments in United States and CanadaOil & Gas Companies are Making Significant Oil & Gas Companies are Making Significant Investments in United States and CanadaInvestments in United States and CanadaInvestments in United States and CanadaInvestments in United States and CanadaInvestments in United States and CanadaInvestments in United States and Canada

North America Top 10 Oil & Gas Companies

(Upstream & Midstream)

Strong Investments Announced in U.S. Indicate Growth in the Oil & Gas Market

6%6%

(Upstream & Midstream)CAPEX Spend $266B (2013-2017)

TransCanadaChevron

Iowa Fertilizer’s investments in a greenfield nitrogen fertilizer manufacturing facility in Iowa

A i l t tl i t ti /

~$1.4B6%

6%6%

5%55%

ExxonMobil

Enbridge

Imperial OilSasol plans to invest in 2 plants to take advantage of cheap natural gas unlocked

Ammonia plants currently in construction/ detailed-engineering or in FEED studies 8

$21B 5%4%

55%

3%4%

3%2%

Imperial Oil

Shell

Suncor EnergyAnadarko

advantage of cheap natural gas unlocked by the U.S. shale revolution

Potential LNG export projects in U.S., with strong interest in exports for non-NAFTA

Others

~$21B

16 2% BPPetroChina

North America Top 10 Oil & Gas C i Will A f

trading partners

Capital investments in shale gas are expected between 2010 and 2015. Shale gas’ economic contribution in U.S. is

16

$1 9T

33

Companies Will Account for ~$120B of the Total Capex

Investments

gas economic contribution in U.S. is expanding rapidly from $76B in 2010 to $118B in 2015.

Source: Financial Times, Wall Street Journal, IHS Global Insight

$1.9T



• Strong investments in UpstreamOil & Gas • Strong investments in Upstream and Downstream• 3-Year CAGR: 8%+

Residential • U.S. Residential Market isU it d St t Residential MarketU.S. Residential Market is Expected to Recover


United States

Industrial • Reasonable levels of Capital

34

Reasonable levels of Capital Spending on Automation

Housing Recovery Remains on Track, and Will Housing Recovery Remains on Track, and Will Be HelpfulBe HelpfulHousing Recovery Remains on Track, and Will Housing Recovery Remains on Track, and Will Be HelpfulBe HelpfulBe HelpfulBe HelpfulBe HelpfulBe Helpful

2 02.5

Housing Starts, M unitsSource: Census Bureau, NEMA/BIS

0 51.01.52.0

Total

0.00.5

2004 2006 2008 2010 2012 2014

Single family

● Housing Market Recovery is Gaining Momentum

– New housing starts rose to their highest level since the middle of 6

7

1 41.61.8

Single Family Home Sales, M unitsSource: Census Bureau

highest level since the middle of November 2008

● Housing Starts Up 25% and 35% in Q4 2012 and Q1 2013

6 9 M th L f HVAC I t ll ti4

5

6

0.40.60.81.01.21.4

New (left axis)– 6-9 Month Lag for HVAC Installation– Additional 100K Systems Sales

35

30.00.2

2004 2005 2006 2007 2008 2009 2010 2011 2012

Existing (right axis)



• Strong investments in UpstreamOil & Gas • Strong investments in Upstream and Downstream• 3-Year CAGR: 8%+

Residential • U.S. Residential market isU it d St t Residential MarketU.S. Residential market is expected to recover


United States

Industrial • Reasonable Levels of Capital

36

Reasonable Levels of Capital Spending on Automation

Industrial Automation Market ReboundIndustrial Automation Market ReboundIndustrial Automation Market ReboundIndustrial Automation Market ReboundIndustrial Automation Market ReboundIndustrial Automation Market ReboundIndustrial Automation Market ReboundIndustrial Automation Market Rebound

$B

U.S. Gross Fixed Capital Formation

Manufacturing

$300

$400 3 Trends Pointing to a U.S. Manufacturing Rebound

• Dissipating cost advantages of3.5% Growth

Today

$100

$200 Dissipating cost advantages of outsourcing

• A weakening dollar is making U.S. d tt ti t f iI d t i l M hi

5.6% Growth

$-goods more attractive to foreign buyers

• Energy production is booming in the $15

$20

Industrial Machinery

U.S. (petroleum and coal products represent 10% of U.S. manufacturing production, up from 3% in 2000)

$5

$10

$15

4.4% Growth

2.8% GrowthSource: The Wall Street Journal

$-1980 1990 2000 2010 2020

2.8% Growth

37


Sales ($B)

$27

$292012-2015 Target: 3-5% Growth ~$27.4B

$24.4B

$23

$25

$27 gInternal

Strategic Investments

Emerging MarketsMature

$

• China• Southeast Asia• Mexico• Eastern Europe /

R i$19

$21Markets

Russia• Middle East

$13

$15

$17

Last 2 Years of Investments Will Pay off With Increased Growth in Key Emerging Markets in

$11

$13

2012 2015F

China, India, Latin America, Middle East and Africa. We Have Plenty of Room for Strong Growth in Emerging Markets – Low Penetration Today

2010 2012 2010-2012 CAGR 2015F 2012-2015F CAGR

Emerging Market Sales

$7.1B $8.7B 10.0% ~$10.7B ~7%

+1.6B +2.0B 38

Growth in Emerging MarketsGrowth in Emerging MarketsGrowth in Emerging MarketsGrowth in Emerging MarketsGrowth in Emerging MarketsGrowth in Emerging MarketsGrowth in Emerging MarketsGrowth in Emerging Markets● Gross Fixed Investments in Emerging Markets will grow

4-6%, Emerson’s Sales Will Grow at a Higher Rate: ~7%

● Top Emerging Countries (Brazil, Russia, India, Mexico and China) will drive approximately 60% of Emerson’s sales in emerging markets in the next three yearssales in emerging markets in the next three years

● China has started to increase fixed Investments to drive moderate recoverymoderate recovery

● Oil & Gas investments will drive growth in Southeast Asia

● Upcoming government election in India will most likely generate a solid 2013-2014 growth year

39

20102010--2012 Emerging Market Sales Grew 2012 Emerging Market Sales Grew $1.6B / 10% CAGR$1.6B / 10% CAGR20102010--2012 Emerging Market Sales Grew 2012 Emerging Market Sales Grew $1.6B / 10% CAGR$1.6B / 10% CAGR$1.6B / 10% CAGR$1.6B / 10% CAGR$1.6B / 10% CAGR$1.6B / 10% CAGR

2012 Sales

2010-2012

CAGR Eastern CAGR

18% $1.1B

Europe

6% $4.9B

Asia PacificLatin

America

Middle East / Africa

6% $4.9B16% $1.4B

2010-2012 2012

13% $1.3B

CAGR2012 Sales2012 Sales 2010-2012

CAGREmerging Markets $8.7B 10%

40

A Nice Balance in All Emerging Markets. Sales Dollar Increases Over the Past Two Years - $1.6B

20122012--2015F Sales in Emerging Markets2015F Sales in Emerging Markets20122012--2015F Sales in Emerging Markets2015F Sales in Emerging Markets20122012 2015F Sales in Emerging Markets2015F Sales in Emerging Markets20122012 2015F Sales in Emerging Markets2015F Sales in Emerging Markets

$12 Middle East & Af i

EasternEuropeLatinA i ~$10 7B

Sales ($B)

$8

$10& Africap/ Russia

Latin America

Asia Pacific

~$10.7B

$8.7B

$6

$8

$2

$4Emerging Markets

2012-2015F CAGR: ~7%

$0

$2

2015F2012

Emerson Has a Good Balance Across All the Emerging Markets and Gaining Strength in the Next Important Tier of Emerging Markets

41

We Have Invested Significantly in Top Emerging We Have Invested Significantly in Top Emerging Economies Over the Last 5 Years, Which Will Economies Over the Last 5 Years, Which Will Drive Our Near Term Growth OpportunitiesDrive Our Near Term Growth Opportunities

We Have Invested Significantly in Top Emerging We Have Invested Significantly in Top Emerging Economies Over the Last 5 Years, Which Will Economies Over the Last 5 Years, Which Will Drive Our Near Term Growth OpportunitiesDrive Our Near Term Growth OpportunitiesDrive Our Near Term Growth OpportunitiesDrive Our Near Term Growth OpportunitiesDrive Our Near Term Growth OpportunitiesDrive Our Near Term Growth Opportunities

Russia• Added 655+ People

16 N OffiMexico

• 16 New Offices• 1 New Facility• 10 New Regional Offices• Spent Over $60M CapEx

• Added 125+ Customer Facing People

• 5 New Offices• 2 New Service Centers• Spent Over $113M on

New Facilities

India• Added 1,860+ People• 28 New OfficesB il

China• Added 540+ Customer

Facing People• 134 New Offices• 28 New Offices

• Spent Over $80M CapExBrazil

• Added 770+ People• 3 New Offices• Sorocaba Facility Expansion

S t O $60M C E

• 134 New Offices• 13 New Service Centers• 10 Facility Expansions• Spent Over $200M CapEx

42

• Spent Over $60M CapEx

Strong Oil & Gas and Infrastructure Investments Strong Oil & Gas and Infrastructure Investments Along With a Reasonable Rebound in China Will Along With a Reasonable Rebound in China Will Drive Solid Emerging Market GrowthDrive Solid Emerging Market Growth

Strong Oil & Gas and Infrastructure Investments Strong Oil & Gas and Infrastructure Investments Along With a Reasonable Rebound in China Will Along With a Reasonable Rebound in China Will Drive Solid Emerging Market GrowthDrive Solid Emerging Market GrowthDrive Solid Emerging Market GrowthDrive Solid Emerging Market GrowthDrive Solid Emerging Market GrowthDrive Solid Emerging Market Growth

$4.0Sales ($B)

2002 CAGR 16%2007 2012

Top 5 Emerging 54%

$2 0

$3.02012

2015F

p g gMarket Sales % of Total Emerging Sales

59%54%

$8.7B$6.1B

$1.0

$2.0CAGR 10%

CAGR 13%

CAGR 22%

CAGR 19%Approaching

$1BApproaching

$1B

$0.0Mexico Brazil Russia India China

2012 Sales $0 6B $0 4B $0 5B $0 6B $3 0B2012 Sales $0.6B $0.4B $0.5B $0.6B $3.0B2012-2015FGFI Growth 5.0% 4.0% 5.0% 5.0% 6.0%

2015F $0 8B $0 5B $0 6B $0 8B $3 8B2015F ~$0.8B ~$0.5B ~$0.6B ~$0.8B ~$3.8B

43

These Five Markets Will Drive ~60% of Our Emerging Market Sales, As We Approach 40% of Total Sales in Emerging Markets

Total China Sales by Business GroupTotal China Sales by Business GroupTotal China Sales by Business GroupTotal China Sales by Business GroupTotal China Sales by Business GroupTotal China Sales by Business GroupTotal China Sales by Business GroupTotal China Sales by Business Group

~$3.8B2005–2012 CAGRCommercial13%

2012 China Economic Slowdown Hurt us, but

$3.0B$2.7B

16.8%

26 4%

Commercial & Residential Solutions

Industrial

13%10-yr CAGR

Slowdown Hurt us, but Recovery Has Started

$

10.5%

26.4%AutomationClimate Technologies

$1.1B 12.6%Process Management

2005 2010 2012 2015F

16.1%NetworkPower

Mid-Tier Investments will Augment Growth in the Next Three Years, But Core Products Drive Largest Dollar Growth

44Note: excludes Motors & Appliances

Investing in the China MidInvesting in the China Mid--Tier Market Tier Market ––New Product DevelopmentNew Product DevelopmentInvesting in the China MidInvesting in the China Mid--Tier Market Tier Market ––New Product DevelopmentNew Product DevelopmentNew Product DevelopmentNew Product DevelopmentNew Product DevelopmentNew Product Development

$0.3B $3.0B ~$3.8B Emerson Sales in China Have Grown t 20% CAGR O

Top Tier China

$2.3B76%96%

at a 20% CAGR Over the Last 12 Years

~$2.8B74%

$290M

Mid-Tier China Sales

Top-Tier China Sales

$0.7B24%

96%

4% ~$1.0B26%2000 2012 2015F

24%

Industrial91 Mid-Tier Products Currently in Market 2013-2015 Total

26%

Industrial Automation

Climate Technologies

NetworkP

+14 42

+3 14

+4 22

2811

18PowerProcess

Management

+4 22

+38 62

140

1824

45

Emerson Has a Lot of Runway for Growth Across Emerson Has a Lot of Runway for Growth Across Our Emerging Markets at 36% of Total SalesOur Emerging Markets at 36% of Total SalesEmerson Has a Lot of Runway for Growth Across Emerson Has a Lot of Runway for Growth Across Our Emerging Markets at 36% of Total SalesOur Emerging Markets at 36% of Total SalesOur Emerging Markets at 36% of Total SalesOur Emerging Markets at 36% of Total SalesOur Emerging Markets at 36% of Total SalesOur Emerging Markets at 36% of Total Sales

Top 5 Next 12

2002 2012 2002 2012

3%

2002 2012 2002 2012

5% 1% 3%

Emerson Sales

Emerson SalesTargeted

GFI

$0 7BEmerson Sales $1 2B $5 1B $2 5B

Targeted GFI

10YR CAGR16%

10YR CAGR14%$0.7B

Total GFI

Targeted GFI

$0.9T $5.3T $0.5T $1.5T

$40B $106B $50B $90B

Emerson Sales $1.2B $5.1B $2.5B16%

10%

14%

7%

~5% Penetration of our Key Markets ~3% Penetration of our Key Markets

g $ $ $ $%

Source: IHS Global Insight and Emerson assessment

2002-2012: Emerson’s Position Strengthened In Key Emerging Markets. We Will Continue On This Path In Order To Increase Our Penetration In

These Markets – Plenty of Room for Growth46

Our Current Relative Position in Key Emerging Our Current Relative Position in Key Emerging MarketsMarkets –– and Top Prioritiesand Top PrioritiesOur Current Relative Position in Key Emerging Our Current Relative Position in Key Emerging MarketsMarkets –– and Top Prioritiesand Top Priorities

Process Management Network Power


Climate Technologies


Mexico

Markets Markets and Top Priorities and Top Priorities Markets Markets and Top Priorities and Top Priorities

Mexico

Brazil

Russia

India

Top 5 Countries

China

Malaysia

Singapore

UAE

The Next12 Impactful

UAE

Africa

Saudi Arabia

Thailand12 Impactful

Markets Czech RepublicPoland

Colombia

S th KSouth Korea

Turkey

Indonesia

Note: Colors signify our current strength of presence to drive growth 47

Southeast AsiaSoutheast Asia is a Key Pocket of Growthis a Key Pocket of GrowthSoutheast AsiaSoutheast Asia is a Key Pocket of Growthis a Key Pocket of GrowthSoutheast AsiaSoutheast Asia is a Key Pocket of Growth is a Key Pocket of Growth Southeast AsiaSoutheast Asia is a Key Pocket of Growth is a Key Pocket of Growth


48

Middle EastMiddle East is Another Key Pocket of Growthis Another Key Pocket of GrowthMiddle EastMiddle East is Another Key Pocket of Growthis Another Key Pocket of GrowthMiddle EastMiddle East is Another Key Pocket of Growthis Another Key Pocket of GrowthMiddle EastMiddle East is Another Key Pocket of Growthis Another Key Pocket of Growth


49

We Continue to Increase Our International and We Continue to Increase Our International and Emerging Markets PresenceEmerging Markets PresenceWe Continue to Increase Our International and We Continue to Increase Our International and Emerging Markets PresenceEmerging Markets PresenceEmerging Markets PresenceEmerging Markets PresenceEmerging Markets PresenceEmerging Markets Presence

100%Gross Fixed Investment Emerson Sales

75%45%

49% 64%~60%MatureMature

74%

50%80%

55%

91%

74%81%

25%

55%

51%

EmergingEmerging 36%~40%

26%

0%1992 2002 2012 2015F

20%

1992 2002 2012 2015F

EmergingEmerging

9%

36%26% 19%

Twenty Years Ago, Our Sales Mix Did Not Reflect Global Investment Patterns.Emerson Continues to Invest in Emerging Markets to Grow and Rebalance

1992 2002 2012 2015F

Source: IHS Global Insight and Emerson assessment 50

Our Past Investments in Emerging Markets are Our Past Investments in Emerging Markets are Continuing to Pay Off with Strong Sales Growth; Continuing to Pay Off with Strong Sales Growth; Mature Market Growth Has ReturnedMature Market Growth Has Returned

Our Past Investments in Emerging Markets are Our Past Investments in Emerging Markets are Continuing to Pay Off with Strong Sales Growth; Continuing to Pay Off with Strong Sales Growth; Mature Market Growth Has ReturnedMature Market Growth Has ReturnedMature Market Growth Has ReturnedMature Market Growth Has ReturnedMature Market Growth Has ReturnedMature Market Growth Has Returned

2012-15F

$8 7B$15.7B

2012

Emerging MarketsMature Markets

$7 1B$13.9B

2010

~$10 7B~$16.7B

2015F CAGR

~7%~2%

$24.4B$8.7B

Total Emerson SalesEmerging Markets

$21.0B$7.1B

~$27.4B~$10.7B

~3-5%~7%

∆ Mature Markets$$1.8B

$~$1.0B

∆ Emerging Markets $1.6B ~$2.0B

51

~55% of Growth Over the Last Two Years has Come from Mature Markets.For the Next Three Years Emerging Markets will Continue to Be a Source of

High Growth and Increased Incremental Sales


Sales ($B)$29

2012 2015 T t 3 5% G th $2 4

$24.4B$25

$27 2012-2015 Target: 3-5% Growth Internal Strategic

InvestmentsEmerging MarketsMature

~$27.4B

• Internal Strategic Programs

• New Products & Markets

• Service $21

$23MarketsMature

Markets

Infrastructure• Perfect Execution

$17

$19

Internal Strategic Investments Leverage Our Global Presence and Ensure We Keep Our

Technology Edge. Focusing on Both Customers and Execution, We Drive Benefits

on Operational Sales and Profits$13

$15

52

on Operational Sales and Profits$11

2012 2015F

Strategic Investments RoadmapStrategic Investments RoadmapStrategic Investments RoadmapStrategic Investments RoadmapStrategic Investments RoadmapStrategic Investments RoadmapStrategic Investments RoadmapStrategic Investments Roadmap● Over the last 12 years, targeted Strategic Investments

allowed us to pursue Higher Growth and Profit O t iti d t l f tOpportunities and create value for our customers

● We were able to Increase Our Services & Solutions at a global level by upgrading our infrastructure andglobal level by upgrading our infrastructure and increasing our headcount

● We invested in Innovation and Technology, defendingWe invested in Innovation and Technology, defending our core markets and entering new ones

● Strategic Investments Increased Sales and Both Gross and Operating Margins, and we will keep investing to obtain further growth

53

We Continue to Invest to Increase Technology Base and We Continue to Invest to Increase Technology Base and Service & Solution Capabilities to Drive a Higher Gross Service & Solution Capabilities to Drive a Higher Gross Profit Margin and Sustainable ProfitabilityProfit Margin and Sustainable Profitability

We Continue to Invest to Increase Technology Base and We Continue to Invest to Increase Technology Base and Service & Solution Capabilities to Drive a Higher Gross Service & Solution Capabilities to Drive a Higher Gross Profit Margin and Sustainable ProfitabilityProfit Margin and Sustainable Profitability

2000 2010 2012 2013E 2015F

Reported

Profit Margin and Sustainable ProfitabilityProfit Margin and Sustainable ProfitabilityProfit Margin and Sustainable ProfitabilityProfit Margin and Sustainable Profitability

2000 2010 2012 2013E 2015FSales $15.5B $21.0B $24.4B $25.0-25.6B ~$27.4B

GP Margin 35.6% 39.6% 40.0% ~40.5% ~42.0%

OP M i * 16 3% 16 7% 17 7% 17 8% 17 9% 19 0%OP Margin* 16.3% 16.7% 17.7% 17.8%-17.9% ~19.0%

E&D (% of Sales) 2.9% 3.3% 3.3% ~3.4% ~3.5%Directed Strategic Investments $20M $15M $45M ~$45M ~$50M

Services & Solutions (% of Sales) 5% 9% 10% ~11% ~13%(% of Sales)

The Increasing Investments We Made On Technology Strategic ProgramsThe Increasing Investments We Made On Technology, Strategic Programs, and Service & Solution Capabilities Were Successful and Brought Value to

Our Customers and Shareholders54Note: potential sales of Embedded Computing & Power would improve margins by ~50 bps

Strategic Investments Focus on Programs That Strategic Investments Focus on Programs That Increase Emerson’s Strategic Value to CustomersIncrease Emerson’s Strategic Value to CustomersStrategic Investments Focus on Programs That Strategic Investments Focus on Programs That Increase Emerson’s Strategic Value to CustomersIncrease Emerson’s Strategic Value to CustomersIncrease Emerson s Strategic Value to CustomersIncrease Emerson s Strategic Value to CustomersIncrease Emerson s Strategic Value to CustomersIncrease Emerson s Strategic Value to Customers

E i h dLevel of Customer

Engagement

Services & Solutions

Enriched Business

Model

gage e t

A li ti

Emerging Markets

Solutions

Historical E&D Investments

ProductTechnologies

Application

Expanding Emerson’s Value

within OurMarket Analysis

Strategic Value

within Our Served Markets

Value

55

20102010--2013E: Targeted Strategic Investment 2013E: Targeted Strategic Investment Programs Drive Very Specific Technology and Programs Drive Very Specific Technology and Key Industry Growth RepositioningKey Industry Growth Repositioning

20102010--2013E: Targeted Strategic Investment 2013E: Targeted Strategic Investment Programs Drive Very Specific Technology and Programs Drive Very Specific Technology and Key Industry Growth RepositioningKey Industry Growth RepositioningKey Industry Growth RepositioningKey Industry Growth RepositioningKey Industry Growth RepositioningKey Industry Growth Repositioning


56

Strategic Investments Continue to Increase the Strategic Investments Continue to Increase the Value We Deliver to Our CustomersValue We Deliver to Our CustomersStrategic Investments Continue to Increase the Strategic Investments Continue to Increase the Value We Deliver to Our CustomersValue We Deliver to Our CustomersValue We Deliver to Our CustomersValue We Deliver to Our CustomersValue We Deliver to Our CustomersValue We Deliver to Our Customers


57

E&D Investments: Confirm Our Technological E&D Investments: Confirm Our Technological Leadership and Increase Our ProfitabilityLeadership and Increase Our ProfitabilityE&D Investments: Confirm Our Technological E&D Investments: Confirm Our Technological Leadership and Increase Our ProfitabilityLeadership and Increase Our ProfitabilityLeadership and Increase Our ProfitabilityLeadership and Increase Our ProfitabilityLeadership and Increase Our ProfitabilityLeadership and Increase Our Profitability

~$1B

Engineering & Development Investments

Patents GrantedPatents Granted~2,000

25%

28%

$623M

$808M 1,646

45%50%

Emerging

72%

17%$6 3

Emerging1,081

40%

45%

50%

Emerging

55%83%75% 72%

Mature

60%

50%

Mature

E&D % of Sales 2.8% 3.3% ~3.5%

2007 2012 2015F2007 2012 2015F

MatureMature

We Will Continue to Moderately Increase Our E&D Investments to Drive Further Growth and Achieve Our Gross Profit Target of 42%

58

Emerson’s New Product Engineering HeadcountEmerson’s New Product Engineering Headcount20102010--2012: Increased +1,081 People2012: Increased +1,081 PeopleEmerson’s New Product Engineering HeadcountEmerson’s New Product Engineering Headcount20102010--2012: Increased +1,081 People2012: Increased +1,081 People20102010 2012: Increased 1,081 People2012: Increased 1,081 People20102010 2012: Increased 1,081 People2012: Increased 1,081 People


59

Major New Products Launches 2010Major New Products Launches 2010--20132013Major New Products Launches 2010Major New Products Launches 2010--20132013Major New Products Launches 2010Major New Products Launches 2010 20132013Major New Products Launches 2010Major New Products Launches 2010 20132013

Our Investments in Technology Drive Our Market Leadership, Create Value to Customers, and Support

Introduction Year

p, , ppSales and Margin Growth

2010 2011 2012 2013E

Introduction Year

Numbers Of Major Programs 72 66 106 120

Intro + 5 Years Sales Expectations $8.9B $8.4B $10.5B $11.0B

Between 2010-2012 We Launched 244 New Products That Will Result in $25+B Sales Over the Next 5 Years

60

Major New Products Launches 2010Major New Products Launches 2010--20132013Major New Products Launches 2010Major New Products Launches 2010--20132013Major New Products Launches 2010Major New Products Launches 2010 20132013Major New Products Launches 2010Major New Products Launches 2010 20132013DeltaV SIS

CHARM I/O Logic Solvers

Liebert NXL 1100 KVA

CHARM I/O Logic SolversSafety

InstrumentedSystems

Leveraging CHARM

High Level Power Availability

T f b d CHARMsTransformer-based UPS LIFE™ - Enabled

(up to 1100 KVA Modules)

250 – 1100 kVA Modules

3 Next Generation Scroll Compressors Wireless

With 1 4BWith over 1.4B operating hours,

wireless is moving into main stream

operations

Refrigeration Market Residential Market

•Significantly Smaller•More Efficient•Embedded

•Energy Efficient•Size•Increased

2010 2011 2012 CAGR

Bookings $75M $120M $195M 61%

p•Embedded Electronics

•Increased Diagnostics

•New Regulations

61

20102010--2012: We Invested Globally on Customer 2012: We Invested Globally on Customer Facing People to Increase Sales and PenetrationFacing People to Increase Sales and Penetration20102010--2012: We Invested Globally on Customer 2012: We Invested Globally on Customer Facing People to Increase Sales and PenetrationFacing People to Increase Sales and PenetrationFacing People to Increase Sales and PenetrationFacing People to Increase Sales and PenetrationFacing People to Increase Sales and PenetrationFacing People to Increase Sales and Penetration

3,415 3,772 3,526 3,865, ,

4,365 5,087

357339

526 773

282 449

,

Investments 2010-2012247

167722

North America $33MLatin America $28MEurope $51M

& f $

247

∆

Middle East & Africa $31MAsia Pacific $106M

Total $249M

2010 Customer

Facing

2012 Customer

Facing

Over the Next 3 Years We Will Add 1,950+ Customer Facing People to Support Our Technology Investment and to Enhance Our Partnership With Customers

62

China Investment for Growth tChina Investment for Growth to Protect and o Protect and Extend Our Broad Customer BaseExtend Our Broad Customer BaseChina Investment for Growth tChina Investment for Growth to Protect and o Protect and Extend Our Broad Customer BaseExtend Our Broad Customer BaseExtend Our Broad Customer BaseExtend Our Broad Customer BaseExtend Our Broad Customer BaseExtend Our Broad Customer Base

5 000+5,000+

1,410 1,7671,925+ Sales

Headcount

E i i

3,724 4,372

2010 2012 2013E

2,605 3,110+Engineering Headcount2,314

We Have Over 4,000 Customer-Facing and Engineering Personnel in a Key Growth Market and We Have Rebalanced Westward

63

Services & Solutions Support Our Growth and Services & Solutions Support Our Growth and Deliver Value to Customers at Several LevelsDeliver Value to Customers at Several LevelsServices & Solutions Support Our Growth and Services & Solutions Support Our Growth and Deliver Value to Customers at Several LevelsDeliver Value to Customers at Several LevelsDeliver Value to Customers at Several Levels Deliver Value to Customers at Several Levels Deliver Value to Customers at Several Levels Deliver Value to Customers at Several Levels

~$3.4B2012 2007 2012

$1 8B$2.4B

2012Sales

2007-2012CAGR

Contracts $550M +6%

Maintenance $697M +11%$1.8B Maintenance $697M +11%Repair and Rebuild $493M +8%Engineering and Consulting $286M +3%

$1.6B

ConsultingInstallation $355M +28%

Training $31M +4%2007 2010 2012 2015F Total $2,412M +9%

% of Sales 9% 10% ~12%7%

Services & Solutions Accounting for ~12% Of Our Sales in 2015 Will be Key in Achieving the Financial Targets that Differentiate us from Our Competitors

64

Our Service Headcount Reflects the Company’s Our Service Headcount Reflects the Company’s Installed BaseInstalled BaseOur Service Headcount Reflects the Company’s Our Service Headcount Reflects the Company’s Installed BaseInstalled BaseInstalled Base Installed Base Installed Base Installed Base

$104B$45B

2,500People 1,615$45Bp 1,615People

Last 10 Years of

SalesCurrent

Headcount

$38B

$10B

1,872People

165People

814People $9B

Service Headcount:3,549

290

5,0182,609 3,695

1,953 3,316

Service Headcount

(2012)

Installed BaseSales

(Last 10 years)2010 2012 2015FProcess Management Network Power

+940

2010 2012 2015FClimate Technologies

+100

290

2010 2012 2015F

+1,323190

,160

g g

Over the Next 3 Years We Will Add 2,300+ Service Personnel to Harvest MRO Opportunities and to Protect Our Valuable Installed Base

65

We Plan to Open 35 New Service Centers Over We Plan to Open 35 New Service Centers Over The Next 3 Years The Next 3 Years –– After Opening 102 from 2010After Opening 102 from 2010--20122012

We Plan to Open 35 New Service Centers Over We Plan to Open 35 New Service Centers Over The Next 3 Years The Next 3 Years –– After Opening 102 from 2010After Opening 102 from 2010--201220122012201220122012

2012 2015F 2012-15Process Management 383 407 +24

We Will Develop Our Service Infrastructure In Emerging Markets

Service Center Locations

Process Management 383 407 +24Network Power 265 266 +1Climate Technologies 16 26 +10

Infrastructure In Emerging Markets and In Clusters Across Major

Installed Base Sites66

Process ManagementProcess Management Provides Support to Provides Support to Customers Promptly, Everywhere, Customers Promptly, Everywhere, and for Every Needand for Every Need

Process ManagementProcess Management Provides Support to Provides Support to Customers Promptly, Everywhere, Customers Promptly, Everywhere, and for Every Needand for Every Need

Proximity & Responsiveness

People: 4hrParts: 24hr



and for Every Needand for Every Needand for Every Needand for Every NeedSystems Measurement/FlowFinal Controls

Responsiveness Required Quick Ship: 5 daysDepot: 2hr

QuickShip: 10 daysStaging: 24hr

Quick Ship: 5 daysDepot: 24hr

Super 3 Super Centers3 Super CentersSupeCenterTier 3

S i 380 Service Centers380 Service Centers

pp• Outage Management • Depot Repair Center

• Multi Business Unit • Training Center

Service CenterTier 2

380 Service Centers380 Service Centers• Multi Business Unit • Quick Ship/Repair

• Software Upgrade • Embedded Resources

Field ServiceTier 1

2,609 Field Service Engineers2,609 Field Service Engineers• Repair/Replace • Basic Maintenance

• Local Response in Remote Areas• Meter Calibration

We Adapted Our Service & Solutions Capabilities to Our Customers’ Needs. The Proximity and Responsiveness We Provide are Unmatched

67

Emerson Continues to Invest in Enriched Emerson Continues to Invest in Enriched Business Models: Business Models: Climate TechnologiesClimate TechnologiesResidential Solutions BusinessResidential Solutions Business ModelModel

Emerson Continues to Invest in Enriched Emerson Continues to Invest in Enriched Business Models: Business Models: Climate TechnologiesClimate TechnologiesResidential Solutions BusinessResidential Solutions Business ModelModelResidential Solutions BusinessResidential Solutions Business ModelModelResidential Solutions BusinessResidential Solutions Business ModelModel


68

Climate TechnologiesClimate Technologies’ Deep System Diagnostics ’ Deep System Diagnostics Convert Data into Information and Deliver First Convert Data into Information and Deliver First Class Solutions and ServicesClass Solutions and Services

Climate TechnologiesClimate Technologies’ Deep System Diagnostics ’ Deep System Diagnostics Convert Data into Information and Deliver First Convert Data into Information and Deliver First Class Solutions and ServicesClass Solutions and ServicesClass Solutions and ServicesClass Solutions and ServicesClass Solutions and ServicesClass Solutions and Services


69


RepurchaseProfit

Growth

ROTCEBIT Margin

14 - 18+%Drives EPS

$5BAcquisitions

ROTCTarget 15 - 25%

14 - 18+%OP Margin15 - 19+%

EPS 10 - 13% CAGR


Underlying Sales

Growth

20052005 –– 2015F Profitability2015F Profitability20052005 –– 2015F Profitability2015F Profitability2005 2005 2015F Profitability2015F Profitability2005 2005 2015F Profitability2015F Profitability2010 2012 2015F2005

35.7%39.6% 40.0% 42.0% Gross Profit~42%

15.0% 16.7%17.7% 19.0% Operating Profit~19%

*

13.6% 14.9% 16.1%17.4% EBIT~17.5% *

71

Through-the-Cycle EBIT* Margin is 14% – 18%+, Driven by a Continuous Focus on Perfect Execution Programs

Note: potential sales of Embedded Computing & Power would improve margins by ~50 bps

Our Perfect Execution Strategy Our Perfect Execution Strategy ––A Key Driver of WorldA Key Driver of World--Class PerformanceClass PerformanceOur Perfect Execution Strategy Our Perfect Execution Strategy ––A Key Driver of WorldA Key Driver of World--Class PerformanceClass PerformanceA Key Driver of WorldA Key Driver of World Class PerformanceClass PerformanceA Key Driver of WorldA Key Driver of World Class PerformanceClass Performance

The Right Product.On Time. Every Time. • Best lead time to customers• Unwavering customer loyalty

Providing Value to Customers and a Return to Shareholders • Solutions to today’s challenges• Continuously improving total cost

Best in Class Asset M t

• Optimal product availability • Matching supply to customer demand

and a Return to Shareholders Continuously improving total cost

Management • Matching supply to customer demandContinually Improve Core • Leading technology and solutions

Profitability to Invest for Growth • Positioned to win in growth areas

72

Perfect Execution Benefits are All Centered Perfect Execution Benefits are All Centered Around Speed and EfficiencyAround Speed and EfficiencyPerfect Execution Benefits are All Centered Perfect Execution Benefits are All Centered Around Speed and EfficiencyAround Speed and EfficiencyAround Speed and EfficiencyAround Speed and EfficiencyAround Speed and EfficiencyAround Speed and Efficiency• Delivering world-class customer service differentiates and builds loyalty

- Elevating customer engagement to anticipate needs fasterf- Equipping customer facing employees with the best tools and training

• Solutions capabilities create value for customers- Innovative approaches to optimization allow customers to focus on growth

- Helping customers manage resources more efficiently – just like we do ourselves

• Rigorous focus on optimizing asset management- Investing in capabilities and technologies to position customers to win- More efficient resource allocation maintains focus on customer needs

• Higher levels of innovation drive growth for customers and Emerson- Continuously investing in new products and solutions- Anticipating technology trends to position for the futureg gy

73

Again, This is a Journey We Must Accelerate and Make Happen in Today’s Slower Growth Market Environment

Our Robust Profit Planning Process Continues to Our Robust Profit Planning Process Continues to Drive Margin, Cash Flow and ReturnsDrive Margin, Cash Flow and ReturnsOur Robust Profit Planning Process Continues to Our Robust Profit Planning Process Continues to Drive Margin, Cash Flow and ReturnsDrive Margin, Cash Flow and ReturnsDrive Margin, Cash Flow and ReturnsDrive Margin, Cash Flow and ReturnsDrive Margin, Cash Flow and ReturnsDrive Margin, Cash Flow and Returns

Supply ChainProcurementLogistics

Product PortfolioDevelopment ProcessProduct Line Integration

Facility ReviewFacility MixBest Practices Logistics

Lean EnterpriseDemand & Production Plan

Product Line Integration, Rationalization, Prioritization Quality

Best PracticesRisk Management

Asset UtilizationInventoryDSO & DPO

Price InitiativesPower & Risk AnalysisNew Services / Features

Annual Profit ReviewsNow Led by Bob Sharp DSO & DPO

CAPEXNew Services / FeaturesVisibility Initiatives Vendavo

y p…….

Perfect Execution

Human ResourcesLabor ProductivityMedical Inflation

Ethics & SafetySafety Audit ResultsEthics Training

ITERP / Oracle UpdatesSystem Updates Medical Inflation

Job MovesCompensation ContainmentTraining/Development

Ethics TrainingSystem UpdatesNew SoftwareEmerson.com

74

Emerson Performance MetricsEmerson Performance Metrics -- ExampleExampleEmerson Performance MetricsEmerson Performance Metrics -- ExampleExampleEmerson Performance Metrics Emerson Performance Metrics ExampleExampleEmerson Performance Metrics Emerson Performance Metrics ExampleExampleCustomer Satisfaction

Customer Service LevelsQuality

On-Time Delivery Customer Loyalty

QualityLead Time Quality (PPM)

Asset Utilization

InventoryDSO & DPO

Days Sales Outstanding Days Payable Outstanding

DSO & DPOCAPEX Days in Cash Cycle Inventory Turnover

Supply Chain

Procurement

Lead Time Service Level

LogisticsLean EnterpriseDemand & Production Plan

Regionalization Forecast Accuracy

75

Emerson Regionalization Strategy ScorecardEmerson Regionalization Strategy ScorecardEmerson Regionalization Strategy ScorecardEmerson Regionalization Strategy ScorecardEmerson Regionalization Strategy ScorecardEmerson Regionalization Strategy ScorecardEmerson Regionalization Strategy ScorecardEmerson Regionalization Strategy Scorecard

Americas EuropeAsia

Pacific

1 – 5 (Worst) to (Best)

Markets

2000 Today 2015 2000 Today 2015 2000 Today 2015Manufacturing 5 5 5 2 2 2 3 2 2Engineering 5 5 5 3 2 2 3 2 2S l Ch i

Americas

atio

n

Supply Chain 3 4 5 2 2 2 2 1 2Customer Sales / Service 4 4 5 - - - - - -Manufacturing - - - 3 3 4 - - -Engineeringng

Loc

a

Engineering - 1 1 4 4 5 - 2 2Supply Chain - - - 3 3 4 - - -Customer Sales / Service - - - 4 4 5 - - -Manufacturing 3 2 2 3 2 2 3 5 5

Europe

fact

urin

Manufacturing 3 2 2 3 2 2 3 5 5Engineering - 2 3 - 2 3 2 4 5Supply Chain 3 4 4 3 4 4 3 5 5Customer Sales / Service 3 3 3 3 3 3 3 4 5

AsiaPacificM

anuf

3 3 3 3 3 3 3 4 5

76

The Emerson Regionalization Strategy is a Key Component of the Planning Process at each of our Business Units – Global Best Cost and Perfect Execution

Perfect ExecutionPerfect Execution –– Key ActionsKey ActionsPerfect ExecutionPerfect Execution –– Key ActionsKey ActionsPerfect Execution Perfect Execution Key ActionsKey ActionsPerfect Execution Perfect Execution Key ActionsKey Actions● Global Vice President of Profit Planning and Perfect Execution

Bob Sharp – Reports to Ed Monser

● Integration of Perfect Execution principles into the Profit Planning process

● Increasing collaboration with customers and suppliers in an g ppintegrated sales and operations planning process

● Supply Chain lead time integrated into the new product development processdevelopment process

● Regional alignment of sales, manufacturing, and the supply base for better supply chain integration and shorter lead timesL t i id t i t ti f dd d● Leverage enterprise wide system integration for added operational efficiency

● In delivering this strategy, we also significantly improve our risk iti hil t ki d t f E ’ i t t iposition, while taking advantage of Emerson’s investment in

global scale and infrastructure

77

We Will Focus on Acquisitions and Divestitures We Will Focus on Acquisitions and Divestitures That Align With Our Value Creation StrategyThat Align With Our Value Creation StrategyWe Will Focus on Acquisitions and Divestitures We Will Focus on Acquisitions and Divestitures That Align With Our Value Creation StrategyThat Align With Our Value Creation Strategy

$29Sales ($B) ~$28.5B

That Align With Our Value Creation StrategyThat Align With Our Value Creation StrategyThat Align With Our Value Creation StrategyThat Align With Our Value Creation Strategy

Portfolio

$25

$27Portfolio

Management

I t l• Strong Cash

Generation$24.4B

2012-2015 Target: 3-5% ~$27.4B

$21

$23Internal

StrategicInvestments

Emerging Markets

Mature

Generation• Strategic Capital

Allocation• Acquisitions &

Divestitures• $2 $3B Acquisitions

$17

$19Markets • $2-$3B Acquisitions

• $2-$2.5B Divestitures

$13

$15

$112012 2015F

78


RepurchaseProfit

Growth

ROTCEBIT Margin

14 - 18+%Drives EPS

$5BAcquisitions

ROTCTarget 15 - 25%

14 - 18+%OP Margin15 - 19+%

EPS 10 - 13% CAGR


Underlying Sales

Growth

Operating Capital Efficiency DrivesOperating Capital Efficiency DrivesSignificantly Higher Cash Flow and ReturnsSignificantly Higher Cash Flow and ReturnsOperating Capital Efficiency DrivesOperating Capital Efficiency DrivesSignificantly Higher Cash Flow and ReturnsSignificantly Higher Cash Flow and ReturnsSignificantly Higher Cash Flow and ReturnsSignificantly Higher Cash Flow and ReturnsSignificantly Higher Cash Flow and ReturnsSignificantly Higher Cash Flow and Returns

Average Trade Working Capital % to Sales

$4.0B $4.3B$4.5B $4.0B

Long Term Targets

$3.6B ~$4.3B

17.9% 19.0% 16.8% 16.7% 17.5%

$4.0B

20122012--2015F Cash Sources & Uses2015F Cash Sources & Uses20122012--2015F Cash Sources & Uses2015F Cash Sources & Uses

100%

20122012 2015F Cash Sources & Uses2015F Cash Sources & Uses20122012 2015F Cash Sources & Uses2015F Cash Sources & Uses

$11B $11B

Dividends$4B80% 36%

We will return ~58% of cash to

our

Operating Cash Flow

$11B

Share Repurchases$2-$3B

40%

60% ~22%our

shareholders

CapEx

Acquisitions$2-$3B

20%

40%~22%

p$2B

0%Cash Sources

2012-2015FCash Uses2012-2015F

20%

Note: Does not reflect divestitures of $2.0B - $2.5B in revenue 81

Continuously Repositioning the Business and Continuously Repositioning the Business and EndEnd--Market Portfolio: Emerson Since 2000Market Portfolio: Emerson Since 2000Continuously Repositioning the Business and Continuously Repositioning the Business and EndEnd--Market Portfolio: Emerson Since 2000Market Portfolio: Emerson Since 2000EndEnd Market Portfolio: Emerson Since 2000Market Portfolio: Emerson Since 2000EndEnd Market Portfolio: Emerson Since 2000Market Portfolio: Emerson Since 2000● Consolidated sales increased at 4% CAGR● Profitability increased at both the Gross Profit Level (+4.4 pts) and y ( p )

at the Operating Profit* Level (+1.4 pts)● Acquired 85 Companies ($6.1B Annual Sales) and Divested 26

Companies ($2 6B Annual Sales)Companies ($2.6B Annual Sales)● International Sales Expanded from 38% to 59% of total Emerson

sales● Actively repositioned our portfolio of businesses into Higher

Growth and More Profitable Markets– Exited the Motors and Appliance components businessespp p

– Built out the Network Power Systems platform

– Evaluating potential sale of Embedded Computing & Power business which would improve margins by ~50 bps but reduce sales by ~$1 4Bwhich would improve margins by ~50 bps, but reduce sales by ~$1.4B in 2014

82

20002000--2012 Continuous Portfolio Management2012 Continuous Portfolio Management20002000--2012 Continuous Portfolio Management2012 Continuous Portfolio Management20002000 2012 Continuous Portfolio Management 2012 Continuous Portfolio Management 20002000 2012 Continuous Portfolio Management 2012 Continuous Portfolio Management Acquisitions

Appliance & ToolsCommercial & Residential

Solutions 8%

ClimateTechnologies

Appliance & Tools22%

Industrial

ClimateTechnologies

15%

85 Companies

IndustrialAutomation

Technologies16%

Network


21%

p$6.1B of Annual Sales

22%

Network Power21%

Network Power25%26 Companies

$2 6B f A l S lProcess

Management19%

21%Process

Management31%

$2.6B of Annual Sales

2000

19%

Divestitures2012

83

Embedded Computing & Power ProfileEmbedded Computing & Power ProfileEmbedded Computing & Power ProfileEmbedded Computing & Power Profile2012 Segment Sales2012 Segment Sales2012 Segment Sales2012 Segment Sales

Industrial / Medical / Test &

Embedded Computing & Power ProfileEmbedded Computing & Power ProfileEmbedded Computing & Power ProfileEmbedded Computing & Power ProfileProductsProductsProductsProducts

35%

12%

ComputingMeasurement

Embedded Computers

Processing Boards

AC-DC Power Supplies

53%Component Interfaces

DC-DC Converters

Telecom / Mobile

($M) 2012

Financial Financial HighlightsHighlightsFinancial Financial HighlightsHighlights Sales by GeographySales by GeographySales by GeographySales by GeographyUnited States

& Canada

CommunicationsInterfaces Converters Mobile

($M) 2012Sales $1,389Adjusted EBITDA $102

% of Sales 7.3%

23%

14%58%

AsiaPacific

% of Sales 7.3%EBIT $14% of Sales 1.0%

14%

5%

58%Europe

Latin America 84

Lower Growth Environment Will Also Affect Lower Growth Environment Will Also Affect Business Group Growth Rates Through This Business Group Growth Rates Through This Current CycleCurrent Cycle

Lower Growth Environment Will Also Affect Lower Growth Environment Will Also Affect Business Group Growth Rates Through This Business Group Growth Rates Through This Current CycleCurrent CycleCurrent CycleCurrent CycleCurrent CycleCurrent Cycle

C i l &

2012-2015F Growth


Climate Technologies 5-7%

4-6%

Industrial Automation 2-4%

Process Management

Network Power 5-7%

6-8%

2% 4% 6% 8% 10%

3 - 5%

Process Management

Emerson Growth Targets

6 8%

Growth Through 2015 Will be Lower Due to Slower, Choppy Global Economic Environment

3 5%Emerson Growth Targets

85

Emerson’s Acquisition Spending 2005Emerson’s Acquisition Spending 2005 –– 2015F2015FEmerson’s Acquisition Spending 2005Emerson’s Acquisition Spending 2005 –– 2015F2015FEmerson s Acquisition Spending 2005 Emerson s Acquisition Spending 2005 2015F2015FEmerson s Acquisition Spending 2005 Emerson s Acquisition Spending 2005 2015F2015FAcquisition Spending by Year$4

$B

$3.0 $3

$2.0-$3 0

$2$3.0

$0.5

$0.8

$0.4 $0.6

$1.0

$0.2 $0.2

$1$0.5-$0.7

$02005 2006 2007 2008 2009 2010 2011 2012 2013E 2012-

2015F

In the 2012-2015F Period We Continue to Focus on Small to MediumIn the 2012 2015F Period We Continue to Focus on Small to Medium Size Bolt-On Acquisitions to Strengthen Our Current Platforms

– Don’t Anticipate Anything Big in 201386

Our Acquisition Efforts Will Be Tailored to Our Acquisition Efforts Will Be Tailored to Strengthening Our Business PlatformsStrengthening Our Business PlatformsOur Acquisition Efforts Will Be Tailored to Our Acquisition Efforts Will Be Tailored to Strengthening Our Business PlatformsStrengthening Our Business PlatformsStrengthening Our Business PlatformsStrengthening Our Business PlatformsStrengthening Our Business PlatformsStrengthening Our Business Platforms

Core Adjacent Geography Opportunistic Technology

Process Management Network Power et o o eSystems IndustrialAutomation Climate Technologies Commercial & Residential Solutions

Process Management and Industrial Automation Have Significant

Residential Solutions

g gOpportunities to Continue to Grow Their Platforms into Global Franchises – We Plan to Focus our Acquisition Activities in These Two Businesses,

but All Businesses are Looking for Opportunities87

2013 Outlook2013 Outlook –– Key Highlights to Drive ValueKey Highlights to Drive Value2013 Outlook2013 Outlook –– Key Highlights to Drive ValueKey Highlights to Drive Value2013 Outlook 2013 Outlook Key Highlights to Drive ValueKey Highlights to Drive Value2013 Outlook 2013 Outlook Key Highlights to Drive ValueKey Highlights to Drive Value● Global Gross Fixed Investment (GFI) is Forecasted to Grow

Only 3-5% in 2013, but this could be optimistic● This will lead to a 2-5% Underlying Sales* Growth in 2013,

with minimal acquisitions in plan● Positive order trends suggest several of our businesses –gg

Process Management, Climate Technologies, Commercial & Residential Solutions – Should Experience Solid Underlying Growth

● Another Record Year for Profit Margins is expected – as we expect all time highs in Gross and Operating Profit Margins

● Significant Cash Flow Improvement is expected to occur –● Significant Cash Flow Improvement is expected to occur producing an incremental gain of $200-$300M in Free Cash Flow*, after a weak Fiscal 2012

88

Fiscal 2013 Financial ExpectationsFiscal 2013 Financial ExpectationsFiscal 2013 Financial ExpectationsFiscal 2013 Financial ExpectationsFiscal 2013 Financial ExpectationsFiscal 2013 Financial ExpectationsFiscal 2013 Financial ExpectationsFiscal 2013 Financial Expectations

Operational Performance 2013E DeltaPerformance

20122013E Delta

Sales $24.4B $25.0 - $25.6B 2% - 5%

GP Margin 40.0% ~40.5% ~50 bps

^

GP Margin 40.0% 40.5% 50 bps

OP Margin* 17.7% 17.8% - 17.9% 10-20 bps

EBIT* $3.9B ~$4.1B ~5%

% of Sales* 16.1% 16.2% - 16.3% 10-20 bps

Operating Cash Flow $3.1B ~$3.35B ~9%

Free Cash Flow* $2.4B ~$2.65B ~10%

EPS $3.39 $3.53-$3.63 4% - 7%

ROTC 19.4% ~20% ~60 bps

89^2012 Operational Performance*: Excluding goodwill impairment of $592M pretax or $0.72 per share in 2012.

Remember: We Still Expect 70-80% of 2013 EPS Growth in the First Half

Creating Long Creating Long Term Term Value at Emerson in the Value at Emerson in the NearNear--Term with a Lower Growth EnvironmentTerm with a Lower Growth EnvironmentCreating Long Creating Long Term Term Value at Emerson in the Value at Emerson in the NearNear--Term with a Lower Growth EnvironmentTerm with a Lower Growth EnvironmentNearNear Term with a Lower Growth EnvironmentTerm with a Lower Growth EnvironmentNearNear Term with a Lower Growth EnvironmentTerm with a Lower Growth Environment

Share RepurchaseProfit

Lower Sales Growth Will Slightly Dampen Our Traditional


ROTC

RepurchaseProfitGrowth


Acquisitions

Target 18 - 22%EBIT Margin~17.5%

OP Margin~19%

Drives EPS 7 - 9% CAGR


We Must Focus on Pockets of Growth in Order to We Must Focus on Pockets of Growth in Order to Drive Strong Results in a Slowing EconomyDrive Strong Results in a Slowing EconomyWe Must Focus on Pockets of Growth in Order to We Must Focus on Pockets of Growth in Order to Drive Strong Results in a Slowing EconomyDrive Strong Results in a Slowing EconomyDrive Strong Results in a Slowing EconomyDrive Strong Results in a Slowing EconomyDrive Strong Results in a Slowing EconomyDrive Strong Results in a Slowing Economy

SalesGrowth

• Due to the slow economic environment underlying sales growth target has been revised to 3-5% for 2012-2015F.

• Positioning to capture pockets of growth in emerging and

Margin Improvement

3-5%

• Strong track record of continuous margin improvement. • Technology investments and Perfect Execution strategy

• Positioning to capture pockets of growth in emerging and mature markets.

~17.5% EBIT ~19% OP

Acquisitions • Plan to spend $2-3B in acquisitions in the next three

years

• Technology investments and Perfect Execution strategy will help drive higher levels of profitability.

Share

cqu s t o s$2-3B

• Plan to spend $2-3B in share repurchase in the next three

years. • Focus will be on bolt-on strategic acquisitions that

enhance business platforms.

Repurchase$2-3B

years.

2013 Investor Conference2013 Investor Conference · 2013. 7. 15. · 2013 Investor Conference2013...

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