Strategy & Direction
Leading as a Power Management Company and Maximizing Shareholder Value
Eaton has undergone a significant transformation in the way it operates. The Eaton Business System is generating real results and capturing the benefits of scale, strength and scope. As we increase innovation and optimize our presence in the most attractive market segments, we are also looking at our businesses differently. That effort also requires carefully assessing each business to ensure it can be accretive to our goals. The end result - an Eaton capable of higher earnings, and higher multiples on those earnings for shareholders.
Creating Balance through Acquisitions and a Focus on High-Growth Market Segments
Eaton has become a stronger company through acquisitions. A focus on higher-margin, higher-growth market segments has provided the balance to mitigate the impact of volatile economic conditions and the ability to significantly increase shareholder value. Since 2000, Eaton has become a power management company shaped by more than 50 acquisitions and 10 joint ventures. Each opportunity is carefully screened, and must demonstrate the ability to perform in the high growth segments of their markets, create differentiated products, services and technologies, and strengthen Eaton's market leadership position. This strategy has produced impressive results, with our acquisitions consistently delivering above their cost of capital, and has made us a better-balanced company in terms of geography, end markets, and the business cycle.
Charting a Challenging Course with our Corporate Goals
We've set some very aggressive targets: Between 2011 and 2015, we expect to achieve an annual compound sales growth of 12 to 14%, 20% compound earnings growth and 15% return on invested capital (ROIC). Eaton also anticipates achieving a 16% segment operating margin and generating 9% free cash flow as a percent of sales by 2015. Emerging markets will continue to make up a larger part of our geographic mix, reaching 30% of our total sales by 2015.
These goals represent a roadmap that tracks our record of delivering exceptional total returns to shareholders. We will continue to focus on doing business right as Eaton leverages the Eaton Business System for global expansion, product and service innovation, improved profitability, and the pursuit of breakout opportunities.
The above contains forward-looking statements. These statements are subject to various risks and uncertainties, some of which are outside the company's control. The following factors could cause actual results to differ materially from those forward-looking statements: governmental priorities, unanticipated technological problems or further substantial deterioration of economic and financial conditions in the United States. We do not assume any obligation to update these forward-looking statements.
Eaton has undergone a significant transformation in the way it operates. The Eaton Business System is generating real results and capturing the benefits of scale, strength and scope. As we increase innovation and optimize our presence in the most attractive market segments, we are also looking at our businesses differently. That effort also requires carefully assessing each business to ensure it can be accretive to our goals. The end result - an Eaton capable of higher earnings, and higher multiples on those earnings for shareholders.
Creating Balance through Acquisitions and a Focus on High-Growth Market Segments
Eaton has become a stronger company through acquisitions. A focus on higher-margin, higher-growth market segments has provided the balance to mitigate the impact of volatile economic conditions and the ability to significantly increase shareholder value. Since 2000, Eaton has become a power management company shaped by more than 50 acquisitions and 10 joint ventures. Each opportunity is carefully screened, and must demonstrate the ability to perform in the high growth segments of their markets, create differentiated products, services and technologies, and strengthen Eaton's market leadership position. This strategy has produced impressive results, with our acquisitions consistently delivering above their cost of capital, and has made us a better-balanced company in terms of geography, end markets, and the business cycle.
Charting a Challenging Course with our Corporate Goals
We've set some very aggressive targets: Between 2011 and 2015, we expect to achieve an annual compound sales growth of 12 to 14%, 20% compound earnings growth and 15% return on invested capital (ROIC). Eaton also anticipates achieving a 16% segment operating margin and generating 9% free cash flow as a percent of sales by 2015. Emerging markets will continue to make up a larger part of our geographic mix, reaching 30% of our total sales by 2015.
These goals represent a roadmap that tracks our record of delivering exceptional total returns to shareholders. We will continue to focus on doing business right as Eaton leverages the Eaton Business System for global expansion, product and service innovation, improved profitability, and the pursuit of breakout opportunities.
The above contains forward-looking statements. These statements are subject to various risks and uncertainties, some of which are outside the company's control. The following factors could cause actual results to differ materially from those forward-looking statements: governmental priorities, unanticipated technological problems or further substantial deterioration of economic and financial conditions in the United States. We do not assume any obligation to update these forward-looking statements.