Columbus McKinnon grows in emerging markets22 November 2011
Pursuing a strategy for growing in multiple emerging markets, specifically in Latin America, Eastern Europe, China and the rest of Asia, Columbus McKinnon reported net sales of $149.9m in the second quarter of fiscal 2012, and said it had sufficient capitalization to materialize its acquisition strategy.
During the company’s quarterly conference call Columbus McKinnons’ president and CEO Timothy Tevens said, “We also are making strategic investments, specifically in emerging markets, such as China and Brazil, and we’re investing in our new products and services, as well. If you combine this with our strong balance sheet, you can see that we’re very well positioned to grow.”
Tevens said Columbus McKinnon is interested in acquiring relatively small businesses. “We continue to look at these relatively small, modest, bolt-on acquisitions in emerging markets in places like Brazil, China and others around the world that give us a better footprint and a better selling instrument into those emerging markets than we are organically building today.”
The proportion of Columbus McKinnon’s earnings coming from such international markets increased to 47%, bringing it closer to reaching its stated 50% goal.
The company’s backlog increased to $107m at 30 September 2011, up from $85.4m the same period last year, but plans are being made to decrease delivery times.
The sales expansion evinced active markets. “We continue to see increasing global economic activity,” Tevens said. “Based on discussions with our channel partners and end users around the world, we do believe that the recovery continues to be pointed in a very positive direction.”
Discussing end user markets, Tevens said end user market growth related to maintenance and repair was driving Columbus McKinnons’ business, and business was also driven by a renewal in oil projects in the Gulf of Mexico.
In various locations, entertainment was a lucrative market, indoor bridge cranes, and projects for government, OEMs and defense declined.
Increased demand shows in US industrial capacity utilization figures, which were up from 74.9% in June 2011 to 75.7% in the current quarter, while utilization in the Eurozone experienced ups and downs throughout the past year.
Tevens checked these statements, saying that the market growth presents ‘significant uncertainty’, given that the company’s markets lag a few quarters behind other industrial companies, challenges to growth may lie ahead.
He said, “However, since we do not expect robust expansion, as we move forward, we will have more challenging comparatives given the timing of the recovery.”