Industrial controls perform well in 1997

One way to determine the health of a business or industry is to examine annual reports of major companies in that sector. However, this method is becoming difficult as more companies are gobbled up by corporations that serve increasingly diverse industries.

In the industrial controls field, many companies that once offered somewhat homogeneous products are disappearing into the confines of other businesses. In some cases, this homogeneity is preserved. Recent examples include Fischer & Porter into Elsag Bailey; Wonderware and Triconex into Siebe, which owns Foxboro; and Measurex into Honeywell.

In other cases, the lines blur a little. This happened when Keystone International (Exeter, N.H.), a major valve manufacturer with a sales volume of $700 million per year, was acquired by Tyco International (Houston. Tex.), which has annual sales of about $8 billion. Similar to many large companies, Tyco breaks out its major divisions’ sales and profits in its annual report. The company’s Flow Control Products division, which absorbed Keystone and other well-known firms, including Mueller, Grinnell, and Hersey, accounts for about 24% of Tyco’s total sales. The division’s 1997 operating income may have been impacted by these recent acquisitions.

Sales growth evens out

The chart shows that most of the industrial controls suppliers did very well in 1997 compared to 1996, though their sales didn’t increase as much as during the 1995-96 period. When the wide swings caused by Elsag Bailey’s purchase of Hartman & Braun (H&B) are factored out, the average increase for 1996-97 was 13%, only slightly less than the 15% increase during 1995-96.

Buying H&B almost doubled Elsag Bailey’s sales volume in 1996. However, Elsag Bailey’s 1997 performance fell short of expectations and was attributed in part to H&B’s lower than expected revenues and margins; revenues and bookings that were negatively impacted by currency translation; and continued weakness in some domestic markets.

Moore Products continues to improve performance; record revenues and earnings in 1997 were attributed to recent agreements and alliances in the process industries, and its move to open system technologies.

The industrial controls industry outperformed the overall economy in the past two years. And, since the general outlook for this year is generally regarded as good to great, the controls and automation industry should follow right along.

MOST CONTROLS SUPPLIERS SALES AND PROFITS UP

Company and/or division
1997 sales ($ millions)
1997 profits* ($ millions)

* Net profit is shown for Elsag Bailey, Moore Products and National Instruments. All others are the operating income for the controls division. The difference between operating and net profit is generally the interest, taxes and extraordinary items that can’t reasonably be assigned to a division.Source: annual reports

Eaton Electric & Electronic Controls
4,032
321

Elsag Bailey Process Automation
1,513
(33)

Emerson Commercial & Industrial
7,365
910

Honeywell Industrial Control
2,547
309

Moore Products
164
6

National Instruments
241
34

Rockwell Automation
4,494
598

Tyco International Flow Control
2,235
(20)

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