Power Tool Industry February 2018
Robert Bosch Tool Corporation
Sales for Robert Bosch GmbH increased 6.7% in 2017 to 78 billion euros. Adjusted for exchange rates, that’s an increase of 8.3%. Bosch’s successful core businesses are fueling Bosch’s efforts to become a leading supplier of IoT technology and mobility solutions, according to CFO Professor Stefan Asenkerschbaumer. Connectivity and digitalization have become part of day-to-day business at Bosch, according to Dr. Volkmar Denner, chairman of the board of management. Bosch currently has some 170 IoT projects that address fundamental challenges such as population growth, urbanization, air pollution and climate change. Bosch’s Home Connect ecosystem incorporates an app in 12 languages for their smart kitchen appliances. The app has already been downloaded more than 15 million times. Denner went on to say there can be no digital transformation without cultural change and they are rethinking leadership and collaboration, breaking down hierarchies and erasing boundaries between departments and functions. They’ve already phased out more than two-thirds of corporate red tape and done away with individual bonuses.
All business sectors played a role in the company’s success, with Power Tools sales increasing 4.5% to 18.5 billion euros; sales increased 6.7% adjusted for currency exchange. In 2017 the Bosch Group’s workforce grew by some 11,200 associates around the world, and as of the end of the year the Bosch Group employed 400,500 people. For 2018 Bosch expects moderate global economic growth of 2.5% and improved sales despite a weak economic environment. They see a series of economic risks due to geopolitical developments such as Brexit, unpredictable US foreign policy and tensions with North Korea.
Robert Bosch is purchasing a 5% share in Here, a mapping and location services company based in the Netherlands. Dr. Volkmar Denner, chairman of the board of management of Robert Bosch GmbH, said that Industry 4.0, smart homes and smart cities are rapidly growing areas of business for Bosch and the alliance with Here will enhance their ability to build and expand data-driven services.
Robert Bosch opened an Internet of Things (IoT) prototype hub in Berlin, Germany and has assigned more than 250 associates who work at the site. Bosch expects that within the next few years as many as 400 experts will advise and support customers on developing and implementing solutions for Industry 4.0, connected mobility, smart cities and smart homes. Bosch’s Software Innovations group is also headquartered on the new campus. Dr. Volkmar Denner, CEO of Bosch, said that they are building bridges between their IoT experts and others in Berlin’s creative and digital workplaces.
Stanley Black & Decker
Revenues for 2017 rose 12% to $12.7 billion, with 7% organic growth and 7% growth from acquisitions partially offset by the sale of the Mechanical Security business. Q4 revenues rose 17% to $3.4 billion, with organic growth rising 8%.
From their Q4 conference call with analysts:
Tools and Storage net sales rose 26% for the year with 11% organic growth as acquisitions (+13%), volume (+12%) and currency (+2%) more than offset a 1% decline in prices to support holiday promotions.
Tools and Storage revenues grew 26% in the fourth quarter, with 11% organic growth overall and 8% organic growth in North America, with strong performances across all channels. The US retail channels produced high single digit growth. Canada contributed organic growth of 8%.
They expect Tools and Storage to grow in the mid-single digits in 2018.
CFO Don Allen said that they expect to generate another year of above-market organic growth of 5%. They are expecting commodity inflation of $150 million partially offset by price increases.
Total merger and acquisition-related charges for the fourth quarter were $27.1 million, primarily related to restructuring and integration costs.
They remain confident that they will capture $80 to $90 million in costs synergies from their integration of Newell Tools brands Lenox and Irwin and Craftsman Tools, acquired from Sears.
They are making excellent progress on product development, supply chain deployment and commercial strategy for Craftsman and are confident they will compete a mid-2018 rollout as planned. In addition to partnering with Lowe’s and Ace, they will be making Craftsman available on Amazon.
North America’s growth was fueled by strong execution and product introductions, including FlexVolt. They are seeing very little cannibalization from Flexvolt and are seeing indications that FlexVolt is stimulating incremental demand for their DeWalt 20 volt cordless power tool system while not compromising growth in corded products.
The time period when FlexVolt was delivering below average margins lasted a little longer than originally projected because of some of the investments they were making in marketing to ensure that people understood the technology. This year they expect FlexVolt margins to be right around line average.
Within Tools and Storage all lines showed high single to double-digit growth for the fourth quarter, with the Power Tool and Equipment group up 13% organically and professional power tools up 15%. Hand tools, accessories and storage organization were up 9%.
They expect the reduction in the corporate tax rate to reduce their effective tax rate by five points overall, although the final impact will be reduced three points due to certain new provisions in the tax law and reduced benefits from previously allowed deductions.
They continue to expect elevated levels of commodity inflation, particularly in tools, and do not expect to see recovery from pricing until late in the second quarter and beyond.
They have created a dedicated team for Craftsman and split them off from the core business. They are developing all new products to go with the brand. While they are committed to launching Craftsman in the second half of the year, customer roll-on plans will be dependent on completion of customer demand plans along with capacity plans.
Demand for the brand is “overwhelming” and they expect demand to exceed supply in 2018. They plan to insource a large number of Craftsman products into their manufacturing and supply chain over the next three years.
They plan to launch about a thousand new products in the core business every year and make 85% of all the products they sell around the world. In addition to that, they have to launch several thousand Craftsman products.
They want to bring as much Craftsman manufacturing back to the US as possible and last year acquired Waterloo manufacturing, a dedicated Craftsman manufacturing facility. They will make more than half of their Craftsman products in the US this year, but it will take about three years before they will get to the same percentage of US manufacturing as they have for their core products. They are not yet ready to update their estimate that Craftsman will add $100 million in incremental sales to the business each year.
FlexVolt is achieving an average rating of 4.9 stars around the world, the highest ratings and reviews they’ve ever achieved.
Tools margins improved 50 basis points year over year, however, commodity inflation will pressure margins this year.
SB&D is acquiring Nelson Fastener Systems. Based in Elyria, Ohio, Nelson manufactures and distributes weld stud fasteners and application equipment for the construction and industrial markets. The $440 million cash deal does not include Nelson’s automotive stud welding business. Nelson reportedly had revenues of $200 million for the past 12 months. The deal is expected to close in the first half of 2018.
Trimble acquired Stabiplan B.V., a developer and seller of design software for MEP engineering based in the Netherlands. The business will become part of the Buildings and Infrastructure segment. The deal will enable Trimble to strengthen their construction solutions for MEP contractors and engineers and enable automated estimating, project management, modeling, detailing, layout and construction.
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