Emerson Wins Maintenance Services Contract From Total

Leading technology and engineering firm Emerson (NYSE:EMR) was recently selected by French oil firm Total Exploration and Production Services for its control and safety system maintenance services.

Better Safety for Total

Total has devised an Integrated Control and Safety Systems strategy aimed to improve its operational performance. The deal with Emerson will span over a ten-year period. Total aspires to optimize the efficiency of its operations while achieving highly safe performance to boost profits and market share.

Emerson will offer servicing, maintenance, obsolescence planning, on-call application support and spare parts management for Total. Some of Emerson’s technology to be used by Total includes DeltaV distributed control systems, DeltaV SIS safety systems and AMS asset management software.

Of late, the company has been winning lucrative contracts in the energy infrastructure domain that is proving to be conducive to its top line. Some of the notable contracts won during the third quarter of fiscal 2016 include a deal to offer control systems and project services to a new waste-to-energy power plant near Knaresborough Allerton, a contract to provide automation technologies and services to Longview Power’s 700-megawatt power plant in Maidsville; and a deal to offer technologies to help regional wastewater utilities meet needs in southeast Virginia.

Energy Market Woes Remain

Despite a dominant foothold in the energy market, Emerson’s business has been hurt by the slowdown in oil and gas markets. This has affected both capital spending and operational expenditure of clients, thereby marring Emerson’s prospects. Also, the issue of oversupply is continuing to impact prices and spending levels in the oil and gas sector, thereby adding to the company’s challenges. With the current economic factors at play, Emerson expects the dull prospects to continue up till 2017.

Also, Emerson believes global economic conditions may take a turn for the worse on account of political uncertainty which will keep spending levels considerably low for the rest of fiscal 2016. Given such tough economic conditions and dwindling order numbers, the company expects underlying sales to be down 5% to 6% in fiscal 2016.

Emerson currently holds a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the sector include A. O. Smith Corp (NYSE:AOS) , Franklin Electric Co. (NASDAQ:FELE) and EnerSys (NYSE:ENS) . All three stocks carry a Zacks Rank #2 (Buy).