Emerson Electric Company — Moody's announces completion of a periodic review of ratings of Emerson Electric Company
Announcement of Periodic Review: Moody’s announces completion of a periodic review of ratings of Emerson Electric Company
Global Credit Research – 01 Sep 2020
New York, September 01, 2020 — Moody’s Investors Service (“Moody’s”) has completed a periodic review of the ratings of Emerson Electric Company and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody’s reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody’s practice has been to issue a press release following each periodic review to announce its completion.
This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Key rating considerations are summarized below.
Emerson’s A2 senior unsecured rating reflects its large scale and leading market positions in its core sectors where it offers a broad range of products. This supports attractive EBITA margins around 20% and solid returns on capital, along with annual free cash flow in excess of $1 billion historically. However, the rating also considers the company’s exposure to highly cyclical end markets, in particular the energy markets, as well ongoing trade disputes between the US and China which adds some uncertainty to Emerson’s operating results. Although large transformative acquisitions are unlikely through FY2021, an increase in the pace or size of acquisitions would weigh negatively on the company’s credit profile. Moody’s expects that credit metrics are likely to lag historical averages in 2020 and into 2021 due to the adverse effects of COVID-19.
This document summarizes Moody’s view as of the publication date and will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period.
The principal methodology used for this review was Manufacturing Methodology published in March 2020. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
This announcement applies only to EU rated and EU endorsed ratings. Non EU rated and non EU endorsed ratings may be referenced above to the extent necessary, if they are part of the same analytical unit.
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
David Berge, CFA Senior Vice President Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Russell Solomon Associate Managing Director Corporate Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653
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