The 2020 Mid-Year Economic Update_long

Day: February 25, 2009

Commentary: Grainger Moves Are Worth Watching

W.W. Grainger has increased the number of SKUs in its catalog 33 percent, year-over-year. The massive scale of Grainger's product expansion over the past few years indicates a reorientation of Grainger's traditional model.
Five years ago, Grainger invested in a multiyear branch expansion program in the top 25 major metro markets. The goal was more local sales people and larger, more merchandise-oriented branches. In 2003, the company set an aggressive 7-10 percent annual growth rate target, and this effort was the engine. The company saw an opportunity to take market share from competitors by increasing presence in local markets.
The effort was all about increasing customer service. The recent product expansion effort has come with an increased focus ...

ERIKS Group 2008 Profit Up 20.1%

Dutch holding company the ERIKS group reported sales for 2008 were €1.13 billion (US$1.44 billion), up 19.2% over 2007. Profit improved 20.1% to €52.5 million (US$67.1 million). Organic growth accounted for 4.7% of growth.
Fourth quarter sales were up 27.6% to €307.4 million (US$392.6 million) over the prior year period. Profit dipped slightly to €9.7 milion (US$12.4 million).
In 2008, ERIKS groups accessed new markets in Spain, the Middle East and China. In addition, the company expanded the range of its private label across most ...

Gibraltar Industries 4Q Sales Down 10.9%

Gibraltar Industries, Inc., Buffalo, NY, reported sales of $249.4 million for the fourth quarter ended Dec. 31, 2008, a drop of 10.9% from the prior year period. The manufacturer and distributor of products for the building, industrial, and vehicular markets recorded a loss of $22 million for the quarter.
For the 12 months ended Dec. 31, 2008, sales were $1.23 billion, up 3% from 2007. Profit increased 82% to $24.1 million. The increase in sales was driven primarily by acquisitions completed in ...

Flowserve Sales Up 5.4% in 4Q

Flowserve Corp., Dallas, TX, supplier of fluid motion and control products and services, reported sales for the fourth quarter ended Dec. 31, 2008, were $1.17 billion, up 5.4% over further quarter 2007. Profit improved 19.3% to $114.4 million.
For the full year 2008, sales were $4.47 billion, an increase of 18.9% from the prior year. Profit was up 73% to $442 ...

Global M&A Activity Falls 38.7% in January

M&A deal activity fell by 38.7 percent globally in January, according to the latest Robert W. Baird & Co. monthly M&A market analysis. It's the largest monthly decline since Sept. 2001, the firm says.
Dollar volume for January was up 14.6 percent, but excluding the Pfizer-Wyeth deal, global M&A volume was down 40.1%. The middle market saw greater hits than the overall market. Strategic acquisitions continue to increase as a percentage of all deals.
A bright spot to the report: The credit markets appear to have "largely stabilized." That said, the report acknowledges that credit is available at much lower levels, higher interest rates and tighter covenants than before. "The ability to raise debt for acquisitions is a key component ...

United Rentals 4Q Sales Drop 14.5%

United Rentals, Inc., Greenwich, CT, reported fourth quarter sales of $791 million, a decline of 14.5% from fourth quarter 2007. The company recorded a loss of $853 million for the quarter, as compared to profit of $153 million a year ago.
For the full year, sales were $3.3 billion, down 10.8% from the prior year. The full year loss was $704 million.
Our 2008 performance reflects our ability to pull the key levers that are within our control, especially our cost structure, liquidity and fleet performance, to confront a challenging environment, CEO Michael Kneeland said. "We are entering 2009 with a continued focus on cost control, a sound capital structure that provides ample liquidity, and the ability to limit capex and to generate positive ...

Fourth Quarter Public Distributor Report

About this report: This is the MDM Public Distributor Report, provided on a quarterly basis to subscribers of Modern Distribution Management. The report is available online only.

Click here to download this report in pdf.

In distributors' recent earnings calls with analysts, many said they were looking at cost reductions, better training, increasing private label, and considering strategic acquisitions in the next year. The focus will remain on sustaining profitability.

Refocusing on the Workforce
Drug distributor Owens & Minor has seen a work force opportunity arising from the economic turmoil: Build on existing resources. In the last quarter, the drug distributor ...

MDM February 25, 2009

This is the pdf of this issue of Modern Distribution Management. Apply the full $24.95 pay-per-view cost toward an annual subscription (within 30 days of purchase), which includes two issues a month plus access to more than six years of online archives and market data. Call 1-888-742-5060 or email to ...

Monthly Wholesale Trade: Sales and Inventories for December 2008

December 2008 sales of merchant wholesalers were $336.1 billion, down 3.6 percent from November and down 10.7 percent from the December 2007, according to the U.S. Census Bureau. December sales of durable goods were down 2.0 percent from last month and were down 9.4 percent from a year ago.
Compared to last month, sales of lumber and other construction materials were down 8.6 percent and sales of motor vehicle and motor vehicle parts and supplies were down 8.1 percent. Sales of nondurable goods were down 4.9 percent from last month and were down 11.8 percent from last year. Sales of petroleum and petroleum products were down 16.4 percent from last month and sales of farm product raw materials were down 9.4 percent.
Inventories. Total inventories of ...

MDM News Digest 3904

Birmingham, AL-based Motion Industries, a subsidiary of Genuine Parts Co., has acquired Monroe Rubber & Plastic Supply, based near Detroit, MI, in Monroe, MI. Monroe is a distributor of hosing and related accessories, and specializes in hydraulic, industrial, metal hose and Teflon hose assemblies. With the acquisition, Motion now has nine facilities focused on cutting and coupling hose assemblies. More
Genuine Parts Company, Atlanta, GA, reported sales for 2008 were $11 billion, up 2 percent from 2007. Profit for the year was $475.4 million, a decrease of 6 percent. Motion Industries, the Industrial Group, saw a 5 percent increase ...

Grainger Plans to Continue Rapid Product Expansion

Chicago, IL-based facilities maintenance distributor Grainger has added 64,000 products to its catalog, along with 27,000 more to its Web site. The additions to the company's catalog are a 33 percent increase over last year's 180,000. (Some products were also removed this year.)
Grainger now has 240,000 products in its catalog and 300,000 online.
In an interview with MDM, Fred Costello, vice president - product management, says Grainger will continue adding products over the next several years.
Every catalog will continue to see a similar increase, Costello says.
"Product line expansion is a Grainger priority. … I can say with confidence that our Canadian and Mexican business units are also ...

Strategies for Surviving the Recession

The economic outlook looks very grim right now. The housing-led slowdown that began in 2007 has now turned into a deep U.S. recession that looks likely to be the longest and deepest downturn since the 1930s.

Unprecedented financial and credit market volatility has reduced prospects for a quick turnaround. Both U.S. Gross Domestic Product (GDP) and the wholesale distribution industry's revenues will decline this year.

As I see it, the companies with the will, the skill, and the till have the best chance of surviving the downturn and coming out with a better position on the other side:

  • The skill to manage their businesses well despite a crisis; ...

Kaman Corp. Sales Up 16.2% In 4Q

Kaman Corp., Bloomfield, CT, reported fourth quarter sales of $316.4 million, an increase of 16.2% over fourth quarter 2007. Profit declined 71.8% to $6.8 million. Continued operating issues at the Wichita facility, softening of sales in the Industrial Distribution business, and lower margins in the Specialty Bearings segment on lower volume contributed to the lower earnings.
For the full year 2008, Kaman reported sales of $1.25 billion, an increase of 15.4% over 2007 sales. Profit declined 36.3% to $35.6 million.  The increase in sales was comprised of organic growth of 8.4% and growth from acquisitions of 7.0%.
Aerostructure segment sales were $43.9 million in the fourth quarter, compared to $28.1 million in fourth quarter 2007. Sales growth of 56% ...