Illinois Tool Works Inc. Business Report FY ended Dec. 2017
Recent Years
Financial Overview |
(in million USD) |
| FY ended Dec. 31, 2017 | FY ended Dec. 31, 2016 | Rate of change (%) | Factors | |
| Overall | ||||
| Net Sales | 14,314 | 13,599 | 5.3 | 1) |
| Operating Income | 3,494 | 3,064 | 14.0 | 2) |
| Automotive OEM Segment | ||||
| Net Sales | 3,271 | 2,864 | 14.2 | 3) |
| Operating Income | 747 | 690 | 8.3 | - |
Factors
1) Net Sales
-The Company’s net sales in the fiscal year ended December 31, 2017 totaled USD 14,314 million, an increase of 5.3% over the previous year. The primary factors for the increase in sales are organic growth in the majority of the Company’s segments, as well as a positive effect from foreign currency translation. The Company’s organic sales increased by 2.9% across all of its segments.
2) Operating Income
-The Company had an operating income of USD 3,494 million in the fiscal year ended December 31, 2017, an increase of 14.0% over the previous year. The increase in operating income was due to organic growth and a favorable impact from a confidential legal settlement.
3) Automotive OEM Segment Sales
-Sales in the Company’s Automotive OEM segment totaled USD 3,271 million in the fiscal year ended December 31, 2017, an increase of 14.2% over the previous year. The segment’s organic sales increased the European and Asia Pacific operating regions by 8.3% and 9.5% respectively. These gains were partially offset by an organic revenue decrease of 1.1% in North America. In addition, positive foreign currency translation effects and the acquisition of ZF TRW’s Engineered Fasteners and Components business both contributed towards the increase in sales.
Acquisitions
-ZF Friedrichshafen AG announced it has completed the sale agreement of its global Engineered Fasteners and Components business to the Company for approximately USD 450 million. The business was part of ZF TRW, which was a part of the Active and Passive Safety Technology Division of ZF. The Company plans to run the Engineered Fasteners and Components business as a standalone division within its Automotive OEM segment. The Engineered Fasteners and Components business is headquartered in Enkenbach, Germany and has 13 locations across Europe, Asia and North America. (From a press release on July 1, 2016)
Divestitures
-In October 2012, the Company announced it has closed on the agreement to divest a 51% stake in its Decorative Surfaces segment, consisting of Wilsonart and related international businesses, to a fund managed by Clayton, Dubilier & Rice, LLC (CD&R). As announced in August, the Company will receive cash proceeds of approximately USD 1.05 billion and will retain a 49% equity interest in the business.
-In April 2012, the Company announced that it completed the sale of its finishing group of businesses to Graco Inc. in a USD 650 million cash transaction. The finishing equipment businesses consist of paint spray systems and technologies for a variety of industrial end markets and applications around the world. Key brands include Gema, Ransburg, DeVilbiss, BGK and Binks.
Outlook
-During the five-year period from 2018 to 2022, the Company aims to achieve annual organic growth between 3% and 5%, an operating margin of at least 25% and an after-tax return on invested capital of at least 20%.
-The Company expects to have organic sales growth between 3% and 4% for the fiscal year ending December 31, 2018.
-The Company anticipates that organic growth in its Automotive OEM segment will be driven by increased penetration into top-tier Chinese OEMs as well as the growth of the electric vehicle segment.
R&D Expenditure |
(in million USD) |
| FY ended Dec. 31, 2017 | FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | |
| Total | 225 | 223 | 218 |
Technological Partnership
-In 2013, DuPont announced that it worked with the Company to develop a cross-over coolant component for the new Ford 3.5-L and 3.7-L engine manifold. The coolant cross-over, manufactured by the Company, uses DuPont Zytel HTN PPA resin instead of brazed metal, which reduces its weight by a pound. Models which contain the new cross-over coolant component include the Ford Taurus, Flex, Edge and Explorer. (From a press release on December 11, 2013)
Product Development
Capless refueling system
-The Company developed a capless refueling system for passenger vehicles, which reduces evaporative emissions at gas stations. The system provides additional convenience for the driver, as it eliminates gas odors from touching a fuel cap and removes the difficulty of unscrewing a cap for those with physical hand issues.
WaveShear isolation spring
-The Company has developed the WaveShear isolation spring in response to the issue of smaller, more fuel-efficient engines which generate increased noise and vibration. The WaveShear isolation spring dampens sound and vibration across a wide temperature range.
Patents
-As of December 31, 2017, the Company owns approximately 3,600 unexpired U.S. patents and 8,000 foreign patents covering articles, methods and machines. The Company also has approximately 1,500 applications for patents pending in the U.S. Patent Office and 4,600 applications pending in foreign patent offices.
-As of December 31, 2017, the Company’s Automotive OEM segment has 3,197 patents and patent applications pending.
Capital Expenditure |
(in million USD) |
| FY ended Dec. 31, 2017 | FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | |
| Total | 297 | 273 | 284 |