Emerson Process Management - Investor Update. John Berra Executive Vice President February 10, 2006

Transcription

1 Emerson Process Management - Investor Update John Berra Executive Vice President February 10, 2006

2 Key Messages 2005 was a record year in growth, profitability, and technology driven by new products The global energy-based markets are strong, and our investment in solutions and services is paying off We continue to widen our lead with gamechanging technology investments and new products And we continue to strengthen our global portfolio with strategic acquisitions

3 2005 Process Management Summary Profile CAGR Sales $3.4B $3.7B $4.2B 11.2% EBIT $388M $476M $671M 31.5% EBIT% 11.4% 12.9% 16.0% 4.6 pts Employees 17.7K 19.0K 20.8K Global Manufacturing Facilities US 20 Europe 20 Asia 10 Latin America 5 Other 0 Total 55 % Best Cost ~30% Systems Solutions & Service Valves & Regulators Asia 2005 Sales by Geography ROW 2005 Product Line Split 26% 30% 19% 20% 26% Measurement Devices 44% 35% Europe United States

4 2005 Process Management Sales by Market Emerson Process Management 2005 Sales $4.2B Total Served Market 2005 Sales $25B Food & Bev Pharma Pulp & Paper Other 3% 3% 4% Chemical 19% 18% Oil & Gas 32% 6% Refining 15% Power Metals & Mining Water & Wastewater Food & Bev Pharma 7% 10% 6% 6% 8% Pulp & Paper Other 7% Oil & Gas 12% Refining 10% 13% Power 21% Chemical

5 There Have Been Similar Times of Continued Expansion Growth Rate Process Served Market Growth Past 20 Years 8.4% CAGR % 9.4% 9.6% 9.4% 10.2% 8.0% 4.0% 6.9% 7.6% 6.0% 2.9% 3.2% 4.4% 5.1% 1.0% 1.7% -0.3% -2.6% -0.9% -2.1% -1.8% Sources: ARC, Frost and Sullivan, Intechno, VDC, Western Research, Internal Estimates

6 2005 Worldwide Process Automation $25 Billion Served Market This slide has been omitted

7 Key Messages 2005 was a record year in growth, profitability, and technology driven by new products The global energy-based markets are strong, and our investment in solutions and services is paying off We continue to widen our lead with gamechanging technology investments and new products And we continue to strengthen our global portfolio with strategic acquisitions

8 Robust Energy Markets Drive New Investments North America Oil sands (Canada) Refinery expansion (USA) Coal fired power plants (USA) Nuclear power plants (USA) Latin America Offshore oil (Brazil, Venezuela) LNG (Mexico, Trinidad, Venezuela) Asia Petroleum and chemicals (China, India) LNG (Indonesia, Australia) Coal fired power plants (China, India, Korea) Nuclear power plants (China) Middle East Oil production (Saudi, UAE, Kuwait) Gas processing (Saudi, UAE) LNG production (Qatar) Downstream refining & petrochem (Saudi, UAE, Kuwait, Qatar) Oil & gas fired power plants (Saudi, UAE, Kuwait) Africa LNG (North & West Coast) Offshore oil (West Coast) Coal fired power plants (South Africa) Russia and the Caspian Oil production (Caspian/Siberia) Gas production (Siberia) Major Oil & Gas Projects Up Nearly 100% vs

9 Key Messages 2005 was a record year in growth, profitability, and technology driven by new products The global energy-based markets are strong, and our investment in solutions and services is paying off We continue to widen our lead with gamechanging technology investments and new products And we continue to strengthen our global portfolio with strategic acquisitions

10 Global Projects Require a Global Partner Emerson Services and Solutions Strength Is Unmatched This slide has been omitted

11 Robust Energy Markets Drive New Investments North America Oil sands (Canada) Refinery expansion (USA) Coal fired power plants (USA) Nuclear power plants (USA) Latin America Offshore oil (Brazil, Venezuela) LNG (Mexico, Trinidad, Venezuela) Asia Petroleum and chemicals (China, India) LNG (Indonesia, Australia) Coal fired power plants (China, India, Korea) Nuclear power plants (China) Middle East Oil production (Saudi, UAE, Kuwait) Gas processing (Saudi, UAE) LNG production (Qatar) Downstream refining & petrochem (Saudi, UAE, Kuwait, Qatar) Oil & gas fired power plants (Saudi, UAE, Kuwait) Africa LNG (North & West Coast) Offshore oil (West Coast) Coal fired power plants (South Africa) Russia and the Caspian Oil production (Caspian/Siberia) Gas production (Siberia) Major Oil & Gas Projects Up Nearly 100% vs

12 Emerson Is Supplier of Choice for Oil Sands Projects 2nd largest (recoverable) hydrocarbon deposit in the world (after Saudi Arabia) Over $80B of investments announced Emerson awarded major Automation scope on multiple projects $10 to 30M+ per project Control, asset management, safety systems 10,000 s field devices Automation engineering and management Emerson has won 9 of the last 11 major projects awarded DeltaV & PlantWeb digital architecture Industry and project execution expertise = Oil Sands Oil Sands Upgrader Ft. McMurray, Alberta

13 Robust Energy Markets Drive New Investments North America Oil sands (Canada) Refinery expansion (USA) Coal fired power plants (USA) Nuclear power plants (USA) Latin America Offshore oil (Brazil, Venezuela) LNG (Mexico, Trinidad, Venezuela) Asia Petroleum and chemicals (China, India) LNG (Indonesia, Australia) Coal fired power plants (China, India, Korea) Nuclear power plants (China) Middle East Oil production (Saudi, UAE, Kuwait) Gas processing (Saudi, UAE) LNG production (Qatar) Downstream refining & petrochem (Saudi, UAE, Kuwait, Qatar) Oil & gas fired power plants (Saudi, UAE, Kuwait) Africa LNG (North & West Coast) Offshore oil (West Coast) Coal fired power plants (South Africa) Russia and the Caspian Oil production (Caspian/Siberia) Gas production (Siberia) Major Oil & Gas Projects Up Nearly 100% vs

14 Emerson Is a Credible Force in the Fast-Growing LNG Market This slide has been omitted

15 We Continue to Win Big in the Global Power Industry This slide has been omitted

16 Refinery Upgrades Will Go Emerson This slide has been omitted

17 Global Business Pursuit and Project Solutions Capability CONTINUE to Deliver Wins This slide has been omitted

18 Broadest Portfolio + Total Solutions = Consistent Wins Across the Board From $40M Turnkey Projects We are able to do this because: Breadth of products Best technology Global Solutions PlantWeb Channel We ARE in every plant Marquee Accounts Rigorous Management Process To $1000 Field Device

19 Key Messages 2005 was a record year in growth, profitability, and technology driven by new products The global energy-based markets are strong, and our investment in solutions and services is paying off We continue to widen our lead with gamechanging technology investments and new products And we continue to strengthen our global portfolio with strategic acquisitions

20 PlantWeb Digital Architecture Fundamentally Changed the Industry PlantWeb uses the predictive power of field intelligence to improve plant performance ASSET OPTIMIZATION CONTROL SYSTEMS MEASUREMENT FINAL CONTROL

21 PlantWeb Digital Architecture Fundamentally Changed the Industry PlantWeb uses the predictive power of field intelligence to improve plant performance ASSET OPTIMIZATION CONTROL SYSTEMS MEASUREMENT FINAL CONTROL We Will Continue to Invest Another $250M+ in PlantWeb, Technologies, and New Products from

22 We Constantly Invest in Technology to Raise the Bar Several years ago we made an investment in our vision for a digital architecture Customers and Emerson have been rewarded We continue our technology investment to extend the benefits of PlantWeb for our customers Safety Instrumented Systems Rotating Equipment PlantWeb for Remote Assets Wireless PlantWeb Investment represents a clarity of vision As competitors copy, we constantly innovate to widen our lead

23 We Extended PlantWeb to Address Customers Safety Systems PlantWeb uses the predictive power of field intelligence to improve plant performance ASSET OPTIMIZATION CONTROL SYSTEMS MEASUREMENT FINAL CONTROL SAFETY Introduced in 2005

24 Smart Safety System Value to customers: Reliability - Provides predictive assurance that your safety system is ready Eliminates costly and risky manual testing Eliminates cost of learning & maintaining 2 systems Value to Emerson Opens $700M opportunity previously unavailable Relatively weak integrated competition WE moved the bar up for our customers! New value proposition to a new audience the important SAFETY audience

25 Further Investment Extended PlantWeb into Rotating Equipment PlantWeb uses the predictive power of field intelligence to improve plant performance ASSET OPTIMIZATION CONTROL SYSTEMS MACHINERY HEALTH MEASUREMENT FINAL CONTROL SAFETY Introduced in 2005

26 Smart Machinery Health Value to customers - Availability 43% of plant incidents caused by mechanical failure There are 2,500 machines in a typical process plant Unplanned shutdowns are the largest cost in the process industries Value to Emerson Opens $500M online machinery condition monitoring market opportunity Extends our value proposition to high value mechanical assets Causes of Plant Incidents Source: M&M Protection Consultants

27 Next PlantWeb Extension Breaks All Boundaries - Assets You Couldn t t Get To Before PlantWeb extends to remote locations revolutionizing Oil and Gas production REMOTE AUTOMATION ASSET OPTIMIZATION CONTROL SYSTEMS Introduced 2005 MACHINERY HEALTH MEASUREMENT FINAL CONTROL SAFETY

28 Smart Remote Automation Value to customers - Improve availability and production of fields Providing rich plant-like information from your virtual plant Reduce unnecessary and costly windshield time of maintaining assets in remote and harsh environments Value to Emerson Further differentiates Emerson in remote automation Many small players opportunity to expand position Extends our value proposition outside the plant

29 Next PlantWeb Extension Breaks All Boundaries - Assets You Couldn t t Get To Before WIRELESS PlantWeb uses the predictive power of field intelligence to improve plant performance REMOTE AUTOMATION ASSET OPTIMIZATION CONTROL SYSTEMS MACHINERY HEALTH MEASUREMENT FINAL CONTROL SAFETY MEASUREMENT MEASUREMENT

30 Smart Wireless Breaks All the Boundaries What s the big deal? Wireless is everywhere NOT inside the plant very special considerations Robustness you can t drop a call Analyst by Central Park Power you can t recharge the battery at night Security in process plants, security means safety Environment plants are canyons of metal and obstructions that change daily Emerson has Solved these Problems with Patented Technology

31 Next PlantWeb Extension Breaks All Boundaries - Assets You Couldn t t Get To Before WIRELESS PlantWeb uses the predictive power of field intelligence to improve plant performance REMOTE AUTOMATION ASSET OPTIMIZATION CONTROL SYSTEMS MACHINERY HEALTH MEASUREMENT FINAL CONTROL SAFETY MEASUREMENT MEASUREMENT

32 Smart Wireless Value to customers GAME CHANGER Slashes the installation cost barrier 90% for information for Asset management Environmental compliance Plant optimization Value to Emerson Opens a totally new market opportunity Could double the number of measurement points in plants Will increase the data management requirement Drive PlantWeb adoption in legacy sites Emerson technology will give us innovation and product leadership

33 Key Messages 2005 was a record year in growth, profitability, and technology driven by new products The global energy-based markets are strong, and our investment in solutions and services is paying off We continue to widen our lead with gamechanging technology investments and new products And we continue to strengthen our global portfolio with strategic acquisitions

34 The Development of a Solutions Business Has Been a Long-term Strategy This slide has been omitted

35 Product Acquisitions Expand Our Ability to Serve Customers This slide has been omitted

36 Acquisition Matrix This slide has been omitted

37 Key Messages 2005 was a record year in growth, profitability, and technology driven by new products The global energy-based markets are strong, and our investment in solutions and services is paying off We continue to widen our lead with gamechanging technology investments and new products And we continue to strengthen our global portfolio with strategic acquisitions

38 We Know How to Integrate Acquisitions 1999 Westinghouse Process Control acquisition 2005 Emerson Process Management is market leader in power industry: United States #1 supplier in US power Over 256,000 MW installed ~40% of US demand China #1 supplier in Chinese power market 97,730 MW installed ~30% of coal fired capacity Ovation WDPF

39 Summary Key Messages 2005 was a record year in growth, profitability, and technology driven by new products The global energy-based markets are strong, and our investment in solutions and services is paying off We continue to widen our lead with game-changing technology investments and new products And we continue to strengthen our global portfolio with strategic acquisitions E Reported Sales Growth 13% 10-12% Underlying Sales Growth* 9% 10-12% EBIT Margin 16.0% basis pts

40 Investor Update Agenda February 10, :00am Introduction and Overview David Farr 8:30 Business Without Borders Ed Monser 9:00 Progressive Customer Focus Charlie Peters 9:30 Process Management Update John Berra 10:00 Industrial Automation Update Jean-Paul Montupet 10:30 Climate Technologies Update Tom Bettcher 11:00 Network Power Update / 2006 Outlook David Farr 11:15 Questions and Answers