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Robert Bosch Tool Corporation Robert Bosch is moving forward with an ambitious acquisition strategy and announced their largest-ever purchase with plans to acquire Irish company Johnson Controls in an $8 billion deal. This acquisition aims to strengthen Bosch’s footprint in the growing heat pump and air conditioning sectors, aligning with the company’s strategic vision to diversify their portfolio and expand into high-demand energy-efficient technologies. Stanley Black & Decker Q3 Conference Call with Analysts: Revenue fell 5% year over year to $3.8 billion, with organic revenue down 2 points. Volume was down 3 points on a weak consumer backdrop and mixed end market demand, which was partially offset by 1 point of price. Their outlook for Tools & Outdoor full year organic revenue is unchanged at down 1% plus or minus 50 basis points, with relatively flat pricing for the full year. Tools & Outdoor third quarter revenue fell 2% year over year to $3.3 billion. Power Tools declined 1% organically due to softness in consumer and DIY brands. DeWalt cordless products grew in the quarter and DeWalt delivered their sixth consecutive quarter of organic growth. Volume was also supported by the initial holiday season sell-in across their priority brands. A weak consumer and DIY backdrop contributed to volumes declining 3%, with currency impacting revenue by another 1%. Price was plus 1% in the quarter. Their global cost reduction program remains on track for expected savings of $1.5 billion by the end of 2024 and $2 billion by the end of 2025. They are funding new growth investments in DeWalt professional tools and the relatively healthy pockets of their business. There will be a lag between lower interest rates and an increase in demand for their categories so they expect choppy markets will extend into the front half of next year until interest rate reductions have a greater effect and the plans of the incoming administration are better known. They are a short-cycle business and will plan their production and inventory to make sure they are ready for stronger demand in the future, which they believe could be as early as the second half of 2025. Approximately one-third of their facilities are undergoing significant change during 2024. They expect this work to continue into 2025 and potentially beyond. They are well underway with their platforming strategy as they identify methods to standardize parts and components across product families. Their goal is simplicity which they plan to achieve by reducing complexity, improving procurement scale and ultimately speeding up their innovation process. Their outlook factors in the continuation of a marginally weaker macro environment in the fourth quarter than they anticipated at the end of the second quarter. Weakness is being driven by continued consumer softness and global automotive production declines that have not yet bottomed out. Organizing more around a brand-centric culture has been a significant cultural change to the organization. They are also working to make sure they are very focused on their end users and understand which end users they serve and what they need to make their lives easier. Pro is relatively stronger than the DIYer due to some of the underlying consumer trends. That has had more impact on the Craftsman brand than on the DeWalt brand. They expect DeWalt to continue to grow in brand strength and also expect the consumer market to strengthen. Ground freight in the US has been a bit higher and more persistent than they expected, which has resulted in some net inflation. Costs seem to be coming more from labor costs than vehicles and fuel. The Trump administration will likely create new tariffs. Questions remain on how they will be rolled out and whether they will be specific to industries or more broad-based, how many countries will be impacted and other factors. They have been planning for this possibility since the spring. Over the next two years they plan to mitigate tariffs by moving production and aspects of the supply chain to different parts of the world. Some of that would be potentially moving things from China to other parts of Asia and possibly to Mexico. Despite the stated objectives of the tariffs, they said it would unlikely they would move much production back to the US because it is not cost-effective to do so. Other News: In a post-election filing with the SEC, SB&D noted that higher tariffs could have an annualized negative impact of $200 million to the company’s annual pre-taxed operating profit, noting that higher tariffs could potentially affect 12.5% of their projected $1.6 billion operating income for 2025. To address the potential impacts of higher tariffs, they’re preparing to discuss price increases with customers, assessing supply chain adjustments in line with current US trade regulations and maintaining direct engagement with policymakers. The filing also indicates that it may take 12 to 24 months for supply chain adjustments to offset a significant portion of the potential tariff increases. © Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval.
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