Lincoln Electric Holdings, Inc., LECO has entered into an agreement to purchase an additional 49.6% interest in Askaynak, a leading Turkish producer of welding consumables and equipment. Lincoln Electric currently holds a 50% stake in Askaynak, which it had secured in 1998.
Askaynak is a supplier and manufacturer of welding consumables, arc welding equipment, including plasma and oxyfuel cutting equipment, and robotic welding systems and generated approximately $70 million in annual revenues. The closing of the transaction is subject to the satisfaction or waiver of customary closing conditions and the receipt of regulatory approvals, including antitrust approval in Turkey.
Acquisitions: A Key Catalyst
In 2010, the company mobilized the organization around a 10-year “2020 Vision and Strategy.” Key strategic initiatives include profitable growth (organic and through a disciplined acquisition strategy), enhancing portfolio mix in equipment systems, automation and alloy consumables, and leveraging continuous improvement initiatives to improve profitability, operating working capital and returns.
In sync with this, Lincoln Electric has recently been active on the acquisition front, which is likely to bolster the portfolio and results. During April 2019, Lincoln Electric acquired Detroit, MI-based Baker Industries, which will complement the Lincoln Electric’s automation portfolio and its metal additive manufacturing service business. Earlier in December 2018, the company acquired the soldering business of Worthington Industries Inc. WOR. This augments the Harris Products Group’s portfolio of industry-leading consumables with the addition of premium solders and fluxes. During the month, Lincoln Electric acquired Coldwater Machine Company and Pro Systems. These two acquisitions will help expand Lincoln Electric’s industry-leading portfolio of automated cutting and joining solutions.
Further, during December 2018, the company acquired Inovatech Engineering Corporation, a manufacturer of advanced robotic plasma cutting solutions for structural steel applications. The buyout will boost Lincoln Electric’s automated cutting solutions and application expertise for structural steel applications.
In January 2017, Lincoln Electric completed its acquisition of Air Liquide Welding, a subsidiary of Air Liquide. The buyout has enhanced the company’s global specialty consumables portfolio and extended channel reach for equipment systems and cutting, soldering and brazing solutions in Europe. The acquisition also offers European customers more comprehensive welding solutions, greater technical application expertise and improved service levels. The company is working rigorously on the Air Liquide integration activities, as the team continues to frame the business into a more efficient and successful enterprise in the region.
Other Growth Drivers in Place
Additionally, the company’s focus on commercializing innovative product and cost-cutting initiatives is likely to stoke growth. Lincoln Electric has increased investment in research and development, and continues to roll out several solutions in the automation solutions market. These product launches are likely to aid growth.
Shares of Lincoln Electric have gained 3% in the past year, underperforming the industry’s rise of 10%. Slowing automation growth is weighing down the stock. Moreover, weak demand in Europe remains a concern for the International Welding segment.
Zacks Rank & Stocks to Consider
Lincoln Electric currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector are DMC Global Inc. BOOM, and Lawson Products, Inc. LAWS, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DMC Global has an estimated earnings growth rate of 79.7% for the ongoing year. The company’s shares have soared 71% in the past year.
Lawson Products has a stellar expected earnings growth rate of 24.5% for the current year. The stock has appreciated 62% in a year’s time.
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