By Jack Keough
The electrical industry didn’t take any vacation time like so many of us did these past few weeks as companies reported earnings that were sluggish to say the least, two top manufacturers are replacing their chief executive officers and another company made one of the biggest acquisitions of the year.
And the news wasn’t good for the economic outlook as some companies lowered their expectations for 2013.
Let’s take a look at some of the major stories you might have missed during the popular vacation period.
France-based Schneider Electric made a large purchase as it announced it had reached an agreement to buy Invensys, a British-owned engineering and industrial automation software firm with many outlets in the U.S. for $5.2 billion. It was reportedly the largest acquisition of a British firm by a foreign-based company in many years.
The deal, which is expected to close in the fourth quarter, will strengthen Schneider’s industrial automation business.
The deal, Schneider’s biggest since its $6.1 billion purchase of American Power Conversion Corp in 2006, will combine Invensys’ automation software that helps run power stations, oil refineries and chemical plants with Schneider’s automation products for the car, aerospace, food and beverage industries, Reuters.com reported.
It had been expected that ABB, Emerson Electric, GE or Siemens would submit a competitive bid. None did. .
But some of those companies did make other news.
Siemens Chief Executive Peter Loescher is leaving the company four years before the end of his contract, after the German-based company issued its second profit warning this year.
Siemens had issued previous profit warnings in May and again last month.
ABB also has a new chief executive following the recent resignation of its CEO Joe Hogan, who has overseen a tremendous amount of acquisition activity in the past few years, including low voltage manufacturer Thomas & Betts, industrial motor manufacturer Baldor Electric, and solar power maker Power One. In all, under Hogan’s reign, the company spent almost $10 billion on acquisitions in the U.S.
The Power-One transaction is expected to close in the second half of this year and gives ABB inverters that allow solar power to be fed into grids.
Ulrich Spiesshofer, who heads the company’s discrete automation and motion unit, will take over from Hogan next month.
Spiesshofer oversaw the Baldor Electric transaction and reportedly said this month that ABB is “now realizing the synergies” of that purchase
The company’s low voltage unit, however, increased some 20 percent, greatly assisted by sales at T&B.
But at the same time, ABB warned that sales for the Zurich-based company would be flat versus 2012.
Earlier this month, ABB acquired French software company Newron System S.A. to expand its market reach and offering for channel partners in automation solutions for buildings. Terms of the agreement were not announced.
Toulouse-based Newron System (http://www.newron-system.com), whose annual sales are less than $10 million, develops software for building-automation solutions and sells it via high-end distributors and installers. The software enables devices, such as blind controls and lights, to communicate with each other and to be managed centrally.
The acquisition supports ABB’s strategy in the growing automation market for buildings. The company will be integrated into ABB’s Low Voltage Products (LP) division.
Several manufacturers revised their expectations for 2013 as they released their quarterly earnings reports. Among them was Eaton, a leading electrical and hydraulics manufacturer.
“We’ve obviously changed our full year market growth guidance to 1% from the guidance we gave you at the end of the first quarter which you recall was a 2% to 3% range headed towards the bottom of that range,” said Eaton’s Chairman and CEO Alexander M. “Sandy” Cutler during a conference call with analysts.
“We think the global economy is trending up slowly, but it is a real mix of positives and negatives. And we don’t think we’re being dower. We think we are being realistic in this regard. U.S. is plodding,” Cutler said.
“Europe may be at a bottom, but we see a little prospect for a lot of vigor in a prospective recovery at this point. And the emerging nations continue to be a mixed bag with China, India and Brazil probably being good examples of halting progress,” he added, according to a transcript of the call as provided by www.seekingalpha.com
There was good news in the earnings report as Eaton’s electrical products group grew six percent. It was also the second quarter in which electrical manufacturer Cooper Industries, acquired last year by Eaton, was included in the company’s earnings statement.
Jack Keough was the editor of Industrial Distribution magazine for more than 26 years. He often speaks at many industry events and seminars. He can be reached at firstname.lastname@example.org or email@example.comTagged with tED