Power Tool Industry February 2019
The Bosch Group had another record-setting year in 2018, with sales adjusted for FX rising 4.3% to 77.9 billion Euros. Due to very adverse exchange-rate effects, sales in the Consumer Goods sector fell 3.2%, but adjusted for FX, sales increased 0.9%. Adjusted for FX, sales in North America rose 7.9%.
In discussing the stellar year, Dr. Volkmar Denner, chairman of the board of management of Robert Bosch GmbH, said that artificial intelligence for industrial applications will become one of their core areas of expertise. He stated that by 2025 they want all of their products to be equipped with AI or for AI to have played a part in their development and manufacture. Denner said that today American and Chinese companies dominate consumer-industry AI, but Bosch intends to master AI and join the global elite. They plan to quadruple the number of in-house AI experts, going from 1,000 today to 4,000 by 2021.
Bosch’s outlook for this year is cautious. They expect the global economy to grow 2.3%, with their cautious outlook fueled by numerous ongoing geopolitical developments, including the unresolved Brexit issue and various trade conflicts, along with punitive tariffs and other trade issues.
Each year Bosch invests 250 million euros in professional training for their associates, who can choose from among 19,000 different programs. New offerings include video classes and apps for learning on the go. The new development is “Bosch Tube,” a kind of YouTube for associates, who can create their own video tutorials and upload them to Bosch Tube.
Bosch has simplified their corporate structure, consolidating 40 corporate departments into 20 and reducing the number of board members to which departments report from 8 to 4.
“Like a Bosch” is the tagline of a new global image campaign that debuted at the Consumer Electronics Show in Las Vegas in early January. The campaign is designed to get the message across that Bosch is a leading provider of connected products and solutions. View “Like A Bosch” video. The campaign puts a fresh spin on an internet phenomenon of videos that feature everyday people who stage bizarre stunts, perform impressive athletic feats or find their way out of predicaments with technical finesse “Like a Boss.” The young hip-hop star who is also a savvy IoT user is always on top of things from car to lawnmower to coffee machine thanks to connected solutions from Bosch. The campaign is intentionally humorous, and Bosch hopes to spark a viral IoT movement and reach a mass audience. Bosch sold 38 million web-enabled products in 2017, and today 20% of Bosch’s 27,000 software developers focus exclusively on the Internet of Things (IoT). Bosch expects the global IoT market to grow 35% a year and reach an annual volume of $250 billion US dollars by 2020.
Bosch experts participated on several panels during the Consumer Electronics Show, including Connected Home Innovations with Anne Rucker, Global Head of Digital Strategy; Technology, Jobs and the Future of Work with Charlie Ackerman, Senior Vice President of Human Resources North America and IoT to the Max, Thanks to 5G, with Davie Sweis, Vice President of Global Digital Business North America.
The state of Pennsylvania awarded a grant to the new Bosch Rexroth apprenticeship program for recent college graduates with degrees in engineering or related fields. The program is designed to allow Bosch to create a succession plan for employees in specific positions that require specialized knowledge and training. Bosch Rexroth will work with area universities and career and tech centers to identify possible candidates among graduating college students. Then Bosch will pair those identified with mentors who will teach them the skills they will need to fill those positions.
Stanley Black & Decker
Q4 revenue increased 5% to $3.63 billion, with organic growth of 6%, ahead of analysts’ estimates. The increase was due to 5% growth in volume, 2% growth from acquisitions and 1% from price, which more than offset the 3% decline that was due to foreign exchange (FX).
Full year revenues rose 8% to $14 billion, with 5% organic growth. Working capital turns for the quarter were 8.8, down 0.3 turns from prior year primarily as a result of carrying higher levels of inventory associated with the Craftsman rollout.
Tools & Storage net sales increased 4% from Q4 2017, due to a 5% increase in volume and a 2% increase in price, which was partially offset by currency (-3%). North America net sales were up 10%, with organic growth of 7% driven by new product innovation, the rollout of the Craftsman brand and price realization. Organic growth included 5% from volume and 2% from price.
Q4 and Full 2018 Conference Call with Analysts:
SB&D faced unusual and volatile external headwinds during 2018, with pressure from input cost inflation, FX and tariffs growing from their initial guidance of $150 million pretax to $370 million. They offset all but $50 million with additional price/cost management and other actions.
They expect to see benefits this year from the rollout of the Craftsman brand and the repositioning of the Stanley and Stanley FatMax brands in the North American home center channel.
They are on track for $1 billion in revenue growth for Craftsman by 2021, seven years ahead of original estimates. The response they’ve seen from customers and end users with Craftsman has been very encouraging. The accelerated growth projections are being driven by strong user acceptance and outstanding in-store execution by both Lowe’s and Ace Hardware.
FlexVolt delivered mid-teen growth for the year and improved profitability, which is now in-line with segment average. They expect to see future revenue benefits from FlexVolt, as well as new innovations coming to market in Tools and other segments.
Hand Tools, Accessories and Storage delivered 8% organic growth as new product introductions, the continued Craftsman rollout and Irwin and Lenox revenue synergies all contributed to growth.
They are in the process of developing and executing an array of margin expansion initiatives they will be covering more fully at their investor meeting in May.
They project 4% organic growth for 2019, at the low end of their goal of 4% to 6% organic growth. They anticipate mid-single digit organic growth for Tools & Storage.
They expect the external environment to continue to be challenging in 2019 and estimate that heavy external headwinds will have a negative 2% impact.
They have included slowing economic growth in the US and slowing construction markets in North America in their guidance. North America is still expected to outpace Europe and emerging markets this year.
Home Depot is now the exclusive home channel retailer both in-store and online for Stanley and Stanley FatMax hand tools and storage products. Products will begin to ship in the first half of this year. That means those products and Porter Cable will no longer be available from Lowe’s.
They are working on a lot of elements of digital technology that can be used to create value in the company by managing processes in a much more efficient manner. They believe they will generate hundreds of millions of dollars of benefit over a two to three-year period and will elaborate and discuss further at their May meeting.
There has been some easing in commodity inflation since December, as some of the commodities they use are engineering-grade, and there has not been as much commodity inflation in those categories as in more general commodities like steel.
SB&D was named to the Carbon Disclosure A List for both climate change and water, something CEO James Loree termed a great recognition and honor that underscores their commitment to social responsibility.
SB&D made their first appearance at the Consumer Electronics Show in Las Vegas in early January, partnering with Cognitive Systems on a motion-based home security product. SB&D also showed off Pria, a voice-controlled home health assistant and automated medication management solution that allows caregivers to program medication schedules.
SB&D is now accepting applications for the Stanley+Techstars Accelerator. This is the second year for the program. The 2019 accelerator wants to draw world-class applicants and will consider startups who work with sustainable packaging or additive manufacturing. Last year the accelerator focused on 3D printing companies and additive manufacturing.
SB&D acquired The Zimmerman Group in Lahnau, Germany. The group specializes in mechanical engineering components and will continue to supply Tucker GmbH in Giessen, which also belongs to SB&D. The previous management team and 70 employees will remain in place.
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