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Robert Bosch Tool Corporation The Bosch Group is acquiring Johnson Controls International’s Residential and Light Commercial HVAC business in an all-cash transaction valued at $8.1 billion. The deal includes the North America Ducted business and global Residential joint venture with Hitachi, Ltd, of which Johnson Controls owns 60% per cent and Hitachi owns 40%. As part of the transaction, Hitachi will retain certain ductless HVAC assets located in Shimizu, Japan. According to Bosch, the acquisition will strengthen Bosch's Home Comfort Group and become part of the Bosch core business nearly doubling Bosch’s sales in this important segment. The deal includes 16 manufacturing sites and 12 engineering locations across more than 30 countries, with roughly 12,000 employees. Brands such as York and Coleman in the US and Hitachi in Asia, for which Bosch will be granted a long-term license, are also part of the deal. Stanley, Black & Decker Q2 revenue fell 3% to $4 billion, which included 1% of organic growth, led by DeWalt, the outdoor product categories and Engineered Fastening. This was more than offset by a 3% drag from the infrastructure divestiture and 1% from currency. Q2 Conference Call with Analysts: Tools & Outdoor Q2 revenue grew 1% organically to approximately $3.5 billion. DeWalt reported their fifth consecutive quarter of organic growth. DeWalt’s performance, combined with a stronger outdoor season, drove 2% volume growth against what they termed a “soft consumer backdrop.” Total Tools & Outdoor revenue was flat as volume growth was offset by 1% of currency and 1% of price, consistent with their plan to support DeWalt cordless promotions. They are now back in line with historical levels of seasonal promotions. Power tools declined 2% organically, driven by the consumer DIY category. Hand tools organic revenue was flat with new DeWalt product introductions driving increased product listings with customers. Tools & Outdoor full year organic revenue is expected to decline 1% at the midpoint plus or minus low single-digits. Pricing for Tools & Outdoor is expected to be relatively flat for the full year, consistent with what they see in the market. North America grew 1% organically, driven by the same factors as the overall segment. Q2 US retail point-of-sale demand was up modestly versus the prior year, led by outdoor and DeWalt cordless promotions. Don Allen reflected on his first year at the helm, saying that they have identified four essential attributes for success, including strong long-term growth potential for the industry, their iconic brands and unique innovation engine and deep customer relationships and loyal end users. They will focus on DeWalt, Craftsman and Stanley as they prioritize resources on serving the professional end user. They are doing more aggressive marketing and employing digital product marketing and deploying additional field resources to extend their reach. They believe their intensified marketing efforts behind DeWalt, coupled with their support of growing the trades through grants, scholarships and tool donations will help them broaden user engagement and brand ambassadorship. These intense sales and marketing initiatives are funded with new investment dollars and reallocation of resources, in line with their commitment to invest in their best prospects for growth. They expect to invest in promotions that will drive demand during the second half of the year and are in good position with their retailers to support that. They are trying to manage costs in order to balance soft demand. Strategic sourcing continues to be the largest contributor to savings to date as they manage $5 billion in spending. They are optimizing their distribution footprint and redesigning their manufacturing network to leverage scale and centers of excellence to maximize operational efficiency. Optimization is a multiyear endeavor and is progressing as planned. They expect to exit or transform a number of facilities across the globe over the next 18 months. Their platforming strategy identifies methods to standardize parts and components across product families, eliminate complexity and scale up procurement. They are incorporating the same strategy into their product development process across power tools and outdoor products and see significant opportunities across DeWalt and Craftsman. Altogether, their supply chain transformation initiatives are expected to generate approximately $0.5 billion in savings in 2024, achieve a full year gross margin of 30% and fund additional growth investments in their core business. They are seeing the benefits of investing. They estimated $300 million to $500 million in investment spending and now believe it will trend closer to $500 million. Other News: SB&D is contesting federal Occupational Safety & Health Administration (OSHA) citations for alleged Ohio safety failures and an assessment of $222,000 in penalties, according to the federal Department of Labor. An investigation found that SB&D could have prevented an electrician from suffering severe burns during an electrical arc blast at a company facility in Ohio, because they did not follow established safety procedures or provide required personal protective equipment. © Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval.
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