Letter to Shareholders

As a more focused and unified company, we are unleashing new possibilities.’

David N. Farr
Chairman and Chief Executive Officer

Net Sales Growth


Earnings Per Share Growth


Operating Cash Flow as a Percent of Sales

Dear Shareholders,

As we prepare to welcome a new year, we have much to celebrate – and strong momentum for the years ahead.

Three years ago, we introduced a bold, new vision for the future of Emerson: two complementary platforms to focus our expertise around our core strengths – Automation Solutions and Commercial & Residential Solutions. As a unified company, we are seeing that vision come to life and celebrating the strategic wins our repositioning has made possible.

Over the past year, Emerson experienced strong growth in sales, earnings and cash flow that reinforced our market leadership position. Our growth was led by U.S. markets, and we continue to experience strong performance in Asia, particularly in China. We are also growing in Europe, where we have made acquisitions that will give us a stronger presence in key markets like Germany.

In 2018, we continued to invest for growth, enhance critical capabilities for our customers and increase shareholder value. We deployed $2.2 billion for bolt-on acquisitions to drive future sales, earnings and cash flow growth, and we repurchased $1 billion in shares. At the same time, we increased our bolt-on acquisition and share repurchase targets through 2021, and enabled the business to continue to deliver on dividend growth, as we have done for 62 years. This strategic, balanced approach to long-term value creating capital deployment is shaping a bright future and positioning the next generation of leadership for continued success.

We are enhancing our technology, software and services capabilities as we leverage our expertise to deliver practical, industrial digital transformation solutions to help our customers achieve their business goals. The benefits of digital transformation are real – improved safety, reliability, productivity and energy efficiency, as well as lower costs. Through advanced software, our Plantweb digital ecosystem and ProAct services, Emerson-wide solutions are making an impact on significant projects across the globe: lowering costs and increasing innovation in areas like the energy-rich Permian Basin and helping ensure quality and food safety through the critical cold chain infrastructure.

We are ahead of schedule with the integration of Valves & Controls, the largest acquisition in Emerson’s history, into our Final Control business, and we continue to identify new growth opportunities as we provide our customers with an unmatched technology portfolio. We are driving differentiation in connected valve offerings and leveraging additive manufacturing technology to create innovative, never-been-done-before valve designs and solutions. Our unique position enables us to drive our Main Valve Partner approach, providing customers with complete lifecycle management of their valve assets. With the added strength of Valves & Controls, we expect the total Final Control business to add $1 billion of growth over the next few years.

I am proud of Emerson’s legacy as an American manufacturing company and our role in advocating to create an environment in the U.S. that supports manufacturers. After years of operating at a disadvantage as a country, tax reform efforts – driven in part by the advocacy efforts of all manufacturers – have reinforced the United States’ position as a global leader. At the same time, the country experienced a resurgence of support for the critical role of manufacturing, and construction increased amid an upswing in economic optimism and investment.

The global economic picture is shifting as we see continued regulation changes in key industries. We are anticipating a strong investment climate in global energy, chemical and power generation markets.

We believe our broad global markets are poised to support our growth plans in 2019 and 2020.

Across the globe, consumers are no longer selecting companies simply by what they make or do; they are choosing companies that align with their core values. We are seeing the same trend with our customers. As a unified company, we worked with thousands of employees worldwide to articulate our global values that have grounded Emerson for 128 years. Emerson’s foundational values inform everything we do as a company.

We also know diverse employee perspectives and experience bring fresh thinking that drives deeper innovation, and we are continuing our emphasis on inclusion. We created a key new position, the officer of diversity and inclusion, who is responsible for overseeing our efforts to enhance diversity. Last year, I had the opportunity to join the “CEO Action for Diversity & Inclusion” initiative, and we continue to drive focus on this issue with our industry peers for a stronger manufacturing industry.

We are leading sustainability efforts that make a positive impact for our employees and in our communities. We continue energy conservation and efficiency improvements at our facilities worldwide. We worked with retailers to help make the switch from harmful hydrofluorocarbons to environmentally responsible refrigerants while lowering maintenance costs, simplifying installation and reducing energy consumption. Our technologies help bring life-saving medicines to market safer and faster. These are only a few of many achievements we are excited to share; I invite you to read more in our full Corporate Social Responsibility Report on Emerson.com – we are making real progress.

Click on one of Emerson’s Values below to learn more.

EMERSONVALUES Collaboration Customer Focus Safety & Quality Continuous Improvement Support Our People Integrity Innovation

We work seamlessly across geographies, platforms, business units and functions to fully leverage our unmatched breadth and expertise.

Customer Focus

We actively listen to our customers to deeply understand their needs and deliver the unique solutions that help ensure their success.


We passionately pursue new technologies, capabilities and approaches to drive tangible value for our customers.

Safety & Quality

We are unwavering in our commitment to the highest standards of safety and quality for ourselves and our customers.

Continuous Improvement

We constantly strive for improvement in all aspects of our business, guided by metrics, feedback and our disciplined management process.

Support Our People

We attract, develop and retain exceptional people in an inclusive work environment where all employees can reach their greatest potential.


We are uncompromising in our honest and ethical behavior, which creates trusting relationships with one another, customers, suppliers and communities.

Over the past two years, I have been privileged to chair the board of the National Association of Manufacturers (NAM). This experience has given me an opportunity to advocate on behalf of manufacturing, influence policy and continue learning as I met fellow manufacturing leaders from across the country. In partnership with NAM leaders, we pushed for tax reform, appearing before Congress to help lawmakers understand our complex industry. While my term ends this year, I am grateful for the opportunity to serve and eager to keep Emerson engaged in this national conversation for a stronger America.

I would like to thank Emerson’s Board of Directors for their ready guidance and wise counsel, and welcome new director Lori Lee. The Board is an active voice at Emerson, and their leadership and perspective are invaluable to this organization. I would also like to thank our employees for their continued commitment, hard work and tremendous support to make Emerson a better company.

On behalf of the Board of Directors and all of us at Emerson, we thank our shareholders for your continued trust and support. Together, we will help ensure the business – and industry – continue thriving for decades to come.

Thank you, and best wishes for a healthy and prosperous 2019.

David N. Farr
Chairman and Chief Executive Officer

The Office of the Chief Executive (from left): Steven J. Pelch, Michael H. Train, David N. Farr, Frank J. Dellaquila, Sara Yang Bosco, Mark J. Bulanda, Edward L. Monser, Robert T. Sharp, Katherine Button Bell, S. Lal Karsanbhai.

The Office of the Chief Executive

In this Report: