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Robert Bosch Tool Corporation Bosch severely restricted their business in Russia in response to the war on Ukraine. The restrictions will apply to both deliveries to Russia and manufacturing operations there. Bosch is also no longer supplying truck components to Russia and Russian customers. Bosch launched an investigation after finding indications that Bosch parts had been misused in “non-civilian applications.” Bosch is acquiring Kassow Robots, a Denmark-based developer of 7-axis collaborative robotic arms (cobots). Financial terms were not disclosed. The acquisition is expected to close later this year. Stanley Black & Decker SB&D shut down their operations in Russia March 10 in support of Ukraine’s resistance to Russia’s attempted takeover of the country. SB&D also donated $1 million to the UN’s Refugee Agency, UNICEF and the Red Cross. SB&D has about 100 employees in Russia and generates about $150 million in annual revenue. CFO Don Allan told analysts that SB&D’s Russian business has been dramatically devalued due to the decline of the Russian ruble amid economic sanctions imposed by the US and other countries. SB&D signed a virtual power purchase agreement (VPPA) with ENGIE North America, a global leader in low-carbon energy solutions, to develop new wind energy in Texas. SB&D expects the VPPA to deliver the equivalent of 54 megawatts of new wind power capacity or 205,000 megawatt hours of renewable electricity annually. TTI/Techtronic Industries TTI reported 2021 sales of US $13.2 billion, an increase of 34.6%. Over a two-year period TTI outperformed the market with 72.2% sales growth, according to CEO Joseph Galli. Organic sales for the full year were up 34.6% to US $3.4 billion. Gross margins increased for the 13th consecutive year, rising from 38.3% in 2020 to 38.8% in 2021. North America grew 33.7%. The Power Equipment business, representing 90.6% of sales, grew 37% to US $12.0 billion. Milwaukee, Ryobi DIY and Ryobi Outdoor all achieved double-digit growth, outperforming the market. Galli said that this year they will continue making substantial investments in the business. Milwaukee sales were up 77% compared to 2019. Galli said TTI reinvested much of their gross margin back into SG&A to drive more R&D, more new products, more geographic expansion and more in-store coverage with key partners such as the Home Depot. Galli challenged SB&D directly several times, stating that TTI was vastly superior to SB&D in investing in the future and blaming SB&D for laying off more than 1,000 employees to beef up their bottom line. TTI made a conscious decision to “weaponize inventory,” meaning they saw the logistics challenges that were increasing around the world during the early days of the pandemic and decided to go on the offensive. According to TTI, their customers complained that TTI’s competitors were not shipping at a 98% service level, which Galli stated is what their customers demand. In order to take advantage of opportunity, last year they built $1.6 billion in inventory over the previous year and now have 14 days of rear-looking inventory. They would have built more inventory if they could have gotten enough semiconductors and cells. TTI’s competitors have also increased inventory, but they're doing it because they're acquiring companies with dated technology, and according to TTI, they are sitting on piles of inventory that should be called excess or perhaps is hard to sell. They believe strongly that TTI will grow double digits this year, perhaps even more. They had a firm target of $20 billion in revenues by 2025 but now think they will achieve that goal by 2024. They see a lot of growth opportunity in battery-powered outdoor equipment. They don’t sell to Lowe’s, they have an exclusive relationship they value with The Home Depot. Their business with The Home Depot was up 72% in the last quarter and 174% for the year. They think investing in gas-powered outdoor equipment is short-sighted as using it will become illegal in many places. They are still in the embryonic stage of rolling out what Galli described as transformative, revolutionary, once-at-a-generation products that will change the way people maintain their yards and anything outdoors. They are going to launch 70 new Ryobi battery products in 2022. They will have 41 battery-powered Ryobi mowers on the market this year, all made in the USA in their state-of-the-art new factory in South Carolina. They will focus on battery-powered outdoor equipment. Rather than trying to integrate gas into cordless, they are just going to develop cordless. They plan to have 977 degreed engineers and many electrical engineers and software development engineers on board by the end of 2022. Two years ago, when they started talking to Home Depot about developing a serious relationship for outdoor products, they had 361 engineers. Last year, they hired 442 engineers. This year they will add another 144 engineers. For power tools, they do not believe that Pro will dominate the market now that the pandemic is waning. They strongly believe DIY remains an enormous opportunity. The cordless Pro market is also strong. Milwaukee grew 41% last year and North America grew 38%, which Galli termed “disappointing.” They have developed a global leadership position in industrial-grade, high-performance power tool accessories. Five years ago, they bought a Wisconsin company doing $20 million a year; this year it will be $100 million. Their PPE Safety initiative is going well and they ae going to start making protective hats in the US that can be customized by contractors so they can track their people. They are also going to focus on the hobby/craft and woodworking markets and believe there is good business to be had there. © Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval
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