gasworld is now including analysis of quarterly performance of a number of welding companies since hard goods are an important part of the business for many gas companies and distributors, as well as an indicator of activity for part of the packaged gases business.
Lincoln has annual sales of over $2.28bn, ESAB around $1.8bn and ITW Welding nearly $1.5bn – for comparison Air Liquide Welding business has sales of around $0.4bn.
Reported welding sales for major companies were again down by around 10%, although Lincoln showed a significant improvement to be close to the previous year.
Underlying sales growth for major welding companies showed improvements at Lincoln and ITW in Q4, while ESAB slipped further to show its weakest growth performance in recent years.
Overall leading welding companies are running at about -5% down compared with -10% through most of 2015/16.
Pricing appears to be mixed but relatively flat or down, reflecting the continued market weakness persisting since mid-2015.
These pricing developments indicate that volumes remain significantly negative.
Combined operating margin was broadly flat in recent quarters at around 18%.
ITW appears to be highest performer, significantly higher than Lincoln and ESAB.
D&A component of ITW reported operating margin (EBITDA) has typically been around 2% in recent years – excluding this ITW remains highest margin business in sector.
Lincoln had annual sales of $2.2bn in 2016 – of which two-thirds are in the Americas, with over a fifth International, while the third business (Harris) is primarily in the Americas. Over 90% of the Americas business is in North America, while nearly two-thirds of International sales are in Europe.
International businesses showed strong growth in reported sales in Q4 alongside Harris, which has consistently been the highest performer over the last year.
Reported sales growth in Americas remains negative but showed its smallest decline since mid-2015.
International business improved significantly in Q4 to show growth close to double digits.
Harris continued the solid volume growth of the last year at around 5%.
Americas continues to show weak volume performance with significant falls YoY.
Pricing appears to be flat in Q4 in both Americas and in the International businesses, although slightly better performance than in the previous quarter.
Harris pricing was solidly positive continuing the improving trend seen since early 2015.
Americas remain the highest performing region in terms of operating margin, with a further rise back towards the 20% peak seen in late-2015.
ESAB is a significant part of the Colfax group which has sales of around $3.6bn – with ESAB sales of $1.8bn accounting for half of the group, while the remaining half is represented by its gas & fluids handling business.
Overall group sales have been negative YoY in recent years, with ESAB performance mirroring the weak group performance since early 2015.
Three quarters of ESAB sales are in welding consumables, with the remainder in equipment.
Just over half of welding sales are in developed economies with the remainder in emerging markets – the latter proportion has been increasing gradually in recent years.
Negative growth performance in welding over recent quarters has been impacted by negative currency impact although the -2% impact in Q4 was the lowest in recent years, and significantly better than the double-digit impact seen in 2015.
Acquisition gave a small boost in Q4 for the first time since the major positive impact seen in Q1 2015 – this represents incremental sales from Arc Machines Inc and other smaller businesses.
Deepening volume weakness has been the feature of ESAB’s recent growth performance with the 7% decline seen in Q4 the worst in recent quarters – partly impacted (-3%) by two fewer working days.
YoY declines in welding pricing continued into Q4 although the trend rate of decline may be stabilising.
ITW Group is the most diversified company with substantial welding activities. Welding represents 10% of total group sales – other major activities in automotive OEM, food equipment, testing & measurement and electronics, polymers and fluids.
Welding activities are primarily under the Miller and Hobart brands.
Q4 reported welding sales of around $360m remain significantly down YoY, with the trend still around -10%.
Underlying sales also continue to be down close to 10% YoY – contrasts with flat underlying performance of total ITW Group.
Organic welding sales (volume/price) still down 8% in Q4 – although this is the smallest decline since mid-2015.
Continuing small negative currency impact in Q4 of under -1%.
Welding profit margin continuing to run marginally above trend for the group in Q4.
EBITDA margin of around 25% indicates ITW profitability may be highest amongst welding majors.