Power Tool Industry March 2022
Robert Bosch Tool Corporation
Robert Bosch startup, Azena, is developing a line of surveillance cameras that rely on edge computing, which means each camera has its own processor, operating system and internet connection and can provide “smart surveillance” of people, objects and places. The cameras connect to an app store where owners can purchase apps from cutting edge video-analytics tools that allow data to be analyzed. Azena is essentially a platform for companies and developers, much like the Apple and Google app stores, but for surveillance software. Azena’s CEO, Hartmut Schaper, says that developers and users must be compliant with the law or risk losing their license. The Azena store currently contains more than 100 apps and offered a face mask detection app within two weeks of the beginning of the pandemic. Applications currently provide video surveillance in closed spaces, such as a job site, where apps can identify certain types of pre-defined behaviors. Azena recognizes that surveillance cameras are often targeted by hackers and has hardened their systems to prevent this. They also have auditing procedures designed to identify and weed out illegitimate uses of their technology.
Bosch Mobility Solutions business saw 2021 sales rise 7.5% to 45.4 billion euros despite the global chip shortage, or 7.9% adjusted for exchange rates. Bosch is dedicated to accelerating the process of making partially and highly automated driving in everyday vehicles a reality and setting standards for the market that will benefit all automakers.
Stanley Black & Decker
Q4 and FY21 Conference Call:
Q4 revenue rose 2% to $4.1 billion with 5 points from price and 6 points from acquisitions. Volume was down 8% due to promotional shipment timing in 2020 and was impacted by logistical supply chain challenges.
Operating margins fell to 13.9%, due to cost inflation and supply chain challenges. They see the decline as a temporary trough and expect that their continued 2021 and 2022 pricing actions will fully offset the $1.4 billion in cost growth associated with inflation and the increased costs of keeping the business running smoothly over the past two years.
They remain bullish on construction and DIY and will focus on innovation, manufacturing, automation, expanding capacity and logistics.
They are targeting 7% to 8% organic growth this year with total revenue growth of more than $4 billion. They expect Tools & Storage to deliver organic growth in the high single digits. They expect MTD and Excel to contribute just over $3 billion in revenue, with about 60% coming in the first half.
Overall, Tools volume will be flat to down this year, with more decline in the first quarter, with sales getting a 6% to 7% boost from price. They are aiming for “as much volume as makes sense.”
Tools & Storage delivered 3% revenue growth as the acquisitions of MTD and Excel contributed 7% and price delivered 5 points. Volume declined 8% and currency subtracted 1%. Organic growth was lower in North America and Europe due to tough comps related to the prior year’s holiday shipping timing, volume constraints caused by supply chain issues and the Q4 semiconductor shortage.
Power tools delivered 20% organic growth in 2021. Hand tools, accessories and storage delivered 17% organic growth.
Tools & Storage ecommerce grew more than 30% in 2021. 2021 saw strong double-digit growth in ecommerce, which now accounts for $2.5 billion globally and 20% of their tool business revenue.
They have already opened two new power tool plants and one new hand tool facility in North America and they are ramping up now. They have also added new battery suppliers and made co-investments with key partners.
The Tools and Outdoors businesses both saw high demand across global markets and channels. Traditional drivers of housing and repair/remodel activities are trending in a positive direction. Both household formation and urban exodus support strong housing demand and low inventories will support new residential construction.
Growing home equity and focus on the home supports reinvestment. Their homes grew in importance for many over the course of the pandemic, causing an overall change in consumer mindset and behavior patterns.
They are notifying North American customers about new prices increases of 5% to 10% or more for tools and outdoor products, depending on the category. That’s on top of the 5% already delivered. They expect to cover 100% of inflation during this cycle.
They will be closely watching for any impacts from higher interest rates or changes in demand following price increases. They expect the supply chain to remain challenging, especially in the first quarter.
The PowerStack battery system launched in December is getting excellent market reception and has the potential to contribute several hundred million dollars of organic growth in 2022.
POS in US retail grew in the high single digits and channel inventory ended below historical levels.
The Outdoor business grew 3% organically in the fourth quarter and 40% in 2021. The addition of MTD and Excel added more than $200 million of revenue. They now expect MTD to outperform expectations in 2022 and have high expectations for their outdoor business.
The supply environment remains tight for semiconductors and electronic components. The elongated global supply chain means inventory spends a lot more time in transit.
They are driving innovation throughout manufacturing that will make their US plants more competitive and improve productivity.
Last year they made significant investments in inventory to meet the outsized demand in the tools business. Excluding the consolidation impact from acquisitions they increased their core inventory position by $1.8 billion compared to year-end 2020. About two-thirds of the increase is composed of inputs, work in progress or goods in transit that will work their way through the supply chain. The inventory build was more than they had planned on; goods in transit expanded due to port and logistical delays. They expect to sell through the incremental inventory this year.
Analysts punished SB&D for their Q4 and full year results and their outlook and plans for 2022, with Citi downgrading their rating to Sell from Buy, citing a lack of innovation, competitors taking market share and margin pressures.
SB&D announced the ten companies selected to participate in this year's Techstars Accelerator. Participants will focus on technologies that enable the electrification of consumer and industrial products through the implementation of battery technology, advanced and recyclable materials, microprocessors, robots, consumer appliances and services. This year's program will be hybrid, utilizing both a virtual and in-person format. The class of startups represent the states of Arizona, California, Florida, Texas, and Virginia and the countries of Canada, Germany and Ireland.
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