Emerson announced net sales for the second quarter ended March 31, 2007 were $5.5 billion, an increase of 14% over the $4.9 billion reported in the prior year period. Net earnings for the second quarter increased 14% to $494 million, or $0.61 per share. This represents a 17% increase in earnings per share from the $0.52 earned in the same period last year. The company achieved underlying sales growth of more than 7% in the quarter, which excludes the impact of favorable exchange rates (over 2%) and growth from acquisitions, net of divestitures (4%). The growth was led by strong international results, where sales increased by 12% on an underlying basis.
Second-quarter operating profit margin improved to 15.2% from 15.0% in the prior year period. Segment margins improved in four of the five business segments, largely as a result of leverage on the volume increases and benefits from prior cost reduction activities. Pretax margins improved to 13.3% from 12.9% in the prior year period. Commodity inflation remains persistent and has continued to put pressure on gross and operating profit margins.
Network Power sales grew 19% in the quarter, which included underlying sales growth of 6%, a favorable impact of 11% from acquisitions, net of divestitures, and 2% from currency translation. Growth remained strong in the core uninterruptible power supply (UPS), precision cooling and China power systems businesses, all of which experienced double-digit growth during the quarter. The margin for this segment was 12.3% versus 11.9% in the prior year quarter. Compared to the first quarter of fiscal 2007, the margin for this segment improved by 250 basis points as the segment is realizing the benefits of prior cost reduction efforts.
Climate Technologies sales increased 11% in the second quarter. Underlying sales increased more than 6%, acquisitions added 3% and currency translation added over 1%. Underlying sales in the United States were down nearly 3% reflecting slower residential construction rates and tough comparisons to the prior year period due to the 13-SEER transition. International growth for this segment was 23% as Europe and Asia both provided exceptional growth. Adoption of heat pump technologies in Europe continued to fuel strong compressor sales growth in this segment. The margin for this segment expanded 40 basis points driven primarily by benefits from prior cost reduction activities and lower restructuring spending.
