Transcript Raising the standard”

AMERICAN STANDARD
www.americanstandard.com/KB.asp
Contents
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Short description of the company
Short overview of Bath & Kitchen
SWOT
Key learnings and overall objectives
Strategy
Where is American Standard vulnerable?
2
A. Overall company overview
3
SHORT COMPANY PROFILE A.S. (1/2)
•
•
Founded in 1872 as the Pierce Steam Heating Company
Stock-listed company since 1929, after the merge with the Standard Sanitary
Manufacturing Company
•
Global company with 3 B.U.: Air Conditioning Systems and Services (brand:
TRANE), Bath & Kitchen, and Vehicle Control Systems (brand: WABCO)
•
•
Each B.U. is a market leader worldwide
61,000 employees in 50 countries
•
•
10 billion $ turnover in 2005 (+8% vs. 2004)
Main events in past 10 years:
in 1988, AS escaped a hostile takeover via a leveraged buy-out and became debtburdened. This explains why AS is less inclined to acquisitions than most of its
competitors. Therefore the focus is on organic growth and the sanitation of the
balance sheet
•
All company processes based on Six Sigma
4
SHORT COMPANY PROFILE A.S. (2/2)
Repartition of Sales 2005 / EBIT 2005
by Business unit (%)
Repartition of Sales 2005
by region
Asia/Pacific/Others
Vehicle Control Systems
18% / 24%
11%
Bath & Kitchen
24% / 10%
Air conditioning
58% / 66%
5
Europe
30%
America's
59%
Concentrate /focus on a few/strongest Brand(s)
American Standard Companies
Airconditioning Systems
(59%)
Americas
Bath & Kitchen
products (23%)
Asia
Vehicle Control systems
(18%)
Europe
Premium:
Premium:
Premium:
Jado
Porcher
Jado
Jado
Mass market:
Mass market
Mass market:
American Standard
American Standard
Ideal Standard
Value
6
Armitage Shanks
Ceramica Dolomite
B. Business Unit „Bath & Kitchen“
7
SHORT PROFILE OF BATH & KITCHEN (1/2)
•
World‘s largest global manufacturer of B&K products, incl. CSW, taps, wellness
products and „accessories“ (furniture incl.)
Total 2005 sales: $ 2.418 billion = 24% of total sales = 10% of company‘s income
•
100%
100%
90%
90%
80%
80%
70%
60%
80%
78%
60%
50%
50%
40%
40%
30%
30%
20%
10%
20%
22%
55%
70%
69%
95%
45%
20%
31%
10%
0%
5%
0%
America's
Residential
Europe
Classical Distri / Wholesale
Commercial
DIY
8
92%
8%
Asia
SHORT PROFILE OF BATH & KITCHEN (2/2)
Sales by segment 2005
Sales by region 2005
Accessories/
Asia
Furniture
7%
11%
Acrylic +
Americ'a
Wellness
40%
Fixtures
13%
(CSW)
50%
Europe
53%
Fittings
26%
9
All brands of the B& K Division
America
Europe
Asien
Ideal Standard
Armitage Shanks
American Standard
Porcher
Jado
Ceramice Dolomite
Sottini, Venesta
Venlo Sanitair
Porcher, Jado
Senesi, Piel
Sangra,Vidima
Senesi, BØrma
10
American Standard
Jado
Sales have developed well in all segments, but the profitability
especially for Bath & Kitchen is worrying
Sales in USD x mln
EBIT in USD x mln
12.000
9.509
10.000
8.000
6.000
7.465
1.813
7.795
1.994
1.200
10.364
8.568
2.235
2.440
800
2.419
600
4.000
400
2.000
200
0
0
2001
2002
2003
2004
984
1.000
2005
831
787
1.013
838
148
155
140
2001
2002
2003
197
2004
102
2005
Air conditioning
Bath & Kitchen
Air conditioning
Bath & Kitchen
Vehicle Control
Total
Vehicle Control
Total
11
Bath & Kitchen has never been up to the level of our two other
segments, but the performance in 2003 and 2005 calls for stern
measures
14%
12%
Ebit margin in %
10%
8%
6%
4%
2%
0%
2001
2002
Air conditioning
2003
Bath & Kitchen
12
2004
Vehicle Control
2005
Total
Just as AS, most of our international competitors cover almost the entire
spectrum of bathroom products
Presence of main suppliers:
by product group
Power base
Bathtubs
& trays
Shower
enclosures
Whirlpools
Ceramic
Sanitaryware
Hydrotherapy
Taps &
Mixers
Bathroom
furniture
American Standard
World
XX
(x)
(x)
XXX
(x)
XX
(x)
Duravit
Europe
X
(x)
XXX
(x)
Grohe
Europe
Inax
Installation
systems
Ceramic
Tiles
XX
XXX
XX
Asia
XX
X
X
XXX
X
X
XX
XX
XX
Kohler
N-America
XX
(x)
X
XXX
X
X
XX
X
(x)
Masco
N-America
X
XXX
XX
XX
XXX
X
X
XXX
XX
X
X
X
X
X
(ES/PT)
(ES/PT)
(ES/PT)
(ES/PT)
(ES/PT)
XX
X
Roca/Laufen
Europe
Sanitec
Europe
XX
X
X
XXX
X
Asia
XX
X
X
XXX
X
XX
XX
Europe
XX
X
X
XXX
X
XX
X
Toto
Villeroy & Boch
Legend:
X
XX
XXX
Source: ASD research
(ES/PT)
= minor weight in sales of company
= medium weight in sales of company
= great weight in sales of company
13
X
XX
Global presence of the main competitors in CSW (year 2004)
500
400
300
200
100
Europe
Ceramics
(incl. sinks and
showers)
Size (m€)
DE
FR
278
320
UK/IE
378
IT
350
Asia
BNL
Sca
ES/PT
RU
102
165
253
173
Oth
EUR
372
America
JP
CN
IN
Rest
S+OA
US
CA
MX
Rest
S-Am
475
702
186
>700
1.209
100
124
>240
Villeroy & Boch
American Standard
Duravit
Eczacibasi
Grohe
Inax
Jacuzzi brands
Kludi
Kohler
Masco
Roca
Sanitec
Toto
Legend:
Market share (volume): > 15%
Market share (volume): >5% - <15%
Market share (volume): >2% - <5%
Market share (volume): <2%
14
On the world ranking list, we estimate that we rank #1
Duravit
CISA
1,4%
1,8%
Crane
2,9%
Inax
2,9%
Jacuzzi
3,0%
Total value as basis:
5,2 billion Euro (ASP)
Villeroy & Boch
6,5%
Toto
8,3%
Sanitec
10,6%
Roca
11,0%
Kohler
14,2%
American Standard
0%
15,4%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Market shares CSW - World
World-wide shares of main suppliers of CSW* - year 2003; coverage approx. 80% of the total world market
* V&B incl. Vitromex, Roca incl. acquisitions 2006
* Due to lacking data inclusive ceramic shower trays and kitchen sinks
Source: BSRIA - Consult - ASD research
15
In Europe, however, we are ranked # 2
Jacuzzi Brands
Qualceram Shires
Eczasibasi
Kohler
Duravit
Total value as basis:
2,2 billion Euro (ASP)
1,6%
1,8%
2,1%
2,7%
3,5%
Villeroy & Boch
10,2%
14,7%
Roca
19,0%
American Standard
Sanitec
0%
21,4%
5%
10%
15%
Market shares CSW - Europe
Shares of the main supliers of CSW* in Europe - year 2003 * Inclusive acquisitions of Roca 2006
*Ceramic Sanitaryware exclusive ceramic shower trays and kitchen sinks
Source: Consult and ASD research
16
20%
25%
More details on our market shares (1/2)
Share of volume
Ceramic Sanitary Ware
Baths: Synthetic
Baths: Steel
Baths: Cast Iron
Hydromassage Baths
Shower Trays: Synthetic
Shower Trays: Ceramic
Shower Trays: Plastic
Shower Trays: Polyconcrete
Shower Trays: Steel/C. Iron
Shower Enclosures
Bath Screens
Conv. Shower Cubicles
Shower Panels
Bathroom furniture
Taps and Mixers
Inst. Electric Showers
Mixer Showers
Power Showers
Commercial Showers
AT BE CH DE DK ES
7% 13% 6% 8% 4% 10%
4% 11%
5%
2%
2%
3% 0%
8% 17%
25%
5%
9%
4%
1%
24%
1%
FI
FR GR IE
IT
NL NO PT UK BG CZ HR HU
1% 16% 29% 28% 45% 3% 2% 4% 25% 47% 10% 10% 4%
15% 16% 24% 22% 3%
2% 14% 33% 1%
8%
6%
14% 21% 5%
4% 13%
6%
1% 0% 3%
1% 4%
1%
0%
0%
18% 28%
45%
11%
83% 32% 68%
6%
8%
4%
4%
4% 1% 1%
0% 2% 4%
0% 5%
0%
11%
5%
12% 13%
0% 4%
0%
1%
14% 12% 15% 14% 26%
1%
6%
8%
4%
0% 11% 94%
6%
3%
17
2%
2%
1%
More details on our market shares (2/2)
Share of volume
Ceramic Sanitary Ware
Baths: Synthetic
Baths: Steel
Baths: Cast Iron
Hydromassage Baths
Shower Trays: Synthetic
Shower Trays: Ceramic
Shower Trays: Plastic
Shower Trays: Polyconcrete
Shower Trays: Steel/C. Iron
Shower Enclosures
Bath Screens
Conv. Shower Cubicles
Shower Panels
Bathroom furniture
Taps and Mixers
Inst. Electric Showers
Mixer Showers
Power Showers
Commercial Showers
LT LV PL RO RU SI SK UA Cent-Am
1% 6% 1% 5% 1% 15% 9% 0%
35%
1% 6% 0% 1% 1%
7% 2%
1%
2%
2%
1%
45%
0%
9%
2%
1%
1%
4%
1%
1%
CA MX US AE BH CN KW OM QT SA
25% 29% 16% 6% 6% 2% 12% 6% 26%
13%
2% 13% 3% 33% 4% 8% 21%
9%
9%
4%
6%
8% 10% 11%
8% 8%
53% 10% 15% 9%
63%
0%
1%
2%
2%
0%
0%
2%
1%
5%
2%
2%
18
8%
10%
3%
8%
4%
4%
2% 13%
3% 10%
9%
CURRENT STRATEGY
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Current key lernings
Business
impact
Product
Production
Pricing
Distribution
• B&K represents 23% of the business but only
10% from EBIT
• CSW is with 50% the biggest business field
• Fitting business represents 26% of sales
• Wellness business makes 13%
• 57 factories worldwide (33 for CSW), mostly
on low cost basis
• aggressive pricing policy
Image
Orga/Genera
l
• 50% of sales in Europe, 42% in the Americas
and 8% in Asia
• High brand awareness, but unclear positioning
• Strong in commercial/professional business due
to plumber heritage
• many personal fluctuations
20
Current key B &K objectives
•
Increase our value added revenues by:
– optimize rebate structures
– increasing the share of value added products (features to benefits like water saving, easy
installation, easy clean)
– improving product availability and time to market
– increasing investments in marketing support
•
Improving productivity by:
–
–
–
–
•
Plant by plant: assortment alignment
Plant to plant : stabilization of output
Use plants as logistic turntables
Enhance cost control and cost reduction
Simplify our business by:
– Reducing models and SKU’s
– Standardizing and simplifying global processes
=> We will keep improving our performance
21
SWOT (only AS team)
22
Strengths
Brand/Image:
•
World‘s largest Bathroom & Kitchen manufacturer with international, well-known brands (high brand
awareness, e.g. 84% in their core markets)
•
Long history and american heritage, coming originally from the plumbing sector, enables to
communicate tradition, experience and technical competence
Assortment:
•
•
•
Good image as complete, innovative bathroom supplier with interior designers, decorators,
consumers and plumbers, due to
– complete multi-category product lines
– high competence in style and technical features (products with real USP‘s)*
– userfriendly marketing supports (trainings, website, ...)
Wide and deep assortment in CSW and fittings, which make 50% / 26% of the business
Work with internationally well-known designers and architects to meet the tastes and styles
of all markets and offer a tailored portfolio (NME, APAC)
Market:
•
•
•
•
strong in the segments “value” (e.g. Arm. Shanks, Cera.Dolomite) and “mass” (AS/IS, private labels),
therefore particularly price-aggressive and strong in project business
Strong own sales organisation in most regions with vertical market specialists
Competitive cost positioning thanks to international production facilities and standardized
processes (e.g. reducing number of factories from 66 to 58)
High market shares in I, UK, BUL, US
23
* a few examples: Cadet 3 Toilets, Lifetime Whirlpools, EverClean Faucets
Weaknesses
Business:
•
•
•
Worst performing division within the company >> restricts investment opportunity (shareholder
value mentality!)
Decreasing sales in 2005 versus 2004 (-0,9%), and significant decline in profits (-48%), particularly
in Europe due to unfavorable mix, as sales migrated to economy products
Big, fluctuant organization (risk of work stoppage, frequent management changes,...)
Strategy:
•
•
•
•
•
•
Unclear strategy for a positioning/segmentation: try to be everybody‘s darling
No clear alignment in the portfolio, distribution, production and pricing policies
Multi-brand strategy and huge assortment = costly + complex >> lack of synergy, loss of focus
„Standard“ doesn‘t sound very exclusive and could be a disadvantage for a premium positioning
Limited assortment in furniture and Wellness
Synergy potentials due to leadership of TRANE (Air Cond.) in project business are not used
Market:
•
•
•
Low marketing support in the past = no inspirational brand image
Overdistributed and dependant on big customers with focus on DIY or mass market, except with
Wolseley
Production/manufacturing problems: product unavailability/supply difficulties, increased energy
costs
24
Opportunities
• Growth in home ownership
• Development of a strong elderly target market worldwide
• Higher spending on bathrooms
• Bathrooms per house increasing
• Housing stock continues to age > growth in the replacement, repair and remodeling,
particularly in the U.S.
• Growth in developing countries, particularly in Asia
• Positive development in worldwide logistics
Threats
• Fluctuations in currency exchange rates
• Development at the N.Y. Stock Exchange
• Development of aggressive main competitors (for e.g Roca)
• Aggressive competition of low-cost suppliers in Asia
• Kohler’s relationships with Wolseley
• Distribution concentration of the wholesale and the DIY (e.g. The Home Depot/Hughes)
• Increasing costs for energy and raw materials
• Purchasing high numbers of various components
• Political risks related to operations in many foreign countries
• Labor cost inflation, especially in low cost countries
25
FUTURE STRATEGY
26
FUTURE STRATEGY
to be defined:
Strategic goals
Brands
Communication
Distribution & Logistics
Strategic Alliances
27