A good way to measure a company's performance is to take a peek at its annual report. A good way to measure an industry's performance is to look at a number of annual reports of the companies that serve that industry. The bar chart accompanying this article includes data from the annual reports of a representative sample of industrial controls companies.
A good way to measure a company’s performance is to take a peek at its annual report. A good way to measure an industry’s performance is to look at a number of annual reports of the companies that serve that industry.
The bar chart accompanying this article includes data from the annual reports of a representative sample of industrial controls companies. The chart compares changes in sales and operating profit for each firm during 1998-99 and 1999-2000.
Part of a whole
With the exception of Danaher Controls, all results shown are for the controls and automation divisions or segments of larger companies. Typically, controls segments represent about 25% of the sales of their parent firms. However, as the companies grow larger through acquisitions and mergers, their control-related portions become relatively smaller portions of the arts of the whole.
A good example of this is last year’s acquisition of Honeywell by Allied Signal, which retained the Honeywell name. When the figures related to a combination like this are rearranged and restated, some surprising numbers can appear. For instance, sales figures for the former Honeywell Industrial Control segment in 1998 and 1999 were $2.502 billion and $2.568 billion respectively. However, sales for the new Honeywell Automation & Control segment were 2.4 times higher at $5.957 billion and $6.115 billion respectively. The division’s operating profit also followed this trend.
As the bar chart demonstrates, five of the firms achieved more than satisfactory increases in sales and profits during 1998-99 and 1999-2000. Two companies’ performances were relatively flat with either slight increases or slight decreases. One company had pretty wide swings but ended the last year with good profits.
If we attempted to grade the whole controls industry based on these firms’ performances, and used the chart’s weighted data for them, their overall results were quite satisfactory. The chart’s all-company increase in sales over the previous year was 8.1% in 1998-99 and 5.1% in 1999-2000. Similarly, the all-company increase in operating profit was 6.6% in 1998-99 and a healthy 12.1% in 1999-2000.
It will be interesting to see to what extent these results carry through for 2001.
