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Lincoln Electric Buys Askaynak, Eyes Regional Growth

Zacks Equity Research

Lincoln Electric Holdings, Inc. LECO has acquired remaining 49.6% controlling interest in Askaynak in a bid to enhance its regional growth in EMEA (Europe, the Middle East and Africa). Lincoln Electric earlier held a 50% stake in Askaynak, which it had secured in 1998.

Askaynak is a leading Turkish producer and supplier of welding consumables, arc welding equipment, including plasma and oxyfuel cutting equipment, and robotic welding systems. The company generated around $70 million in annual revenues. Askaynak strengthens Lincoln Electric’s position in the EMEA region, by offering customers with superior service, innovative solutions and operational excellence.

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 continued improvement initiatives to boost profitability, operating working capital and returns.

In sync with this, Lincoln Electric has been on an acquisition spree, which is likely to enhance its portfolio and be conducive to the company’s long-term performance. This April, Lincoln Electric acquired Detroit, MI-based Baker Industries, which will complement Lincoln Electric’s automation portfolio and its metal additive manufacturing service business. Last December, the company acquired the soldering business of Worthington Industries Inc. WOR. This strengthens Harris Products Group’s portfolio of industry-leading consumables with the addition of premium solders and fluxes. Last December, Lincoln Electric also 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, in the same month, the company acquired Inovatech Engineering Corporation, a manufacturer of advanced robotic plasma cutting solutions for structural steel applications. This 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 as well as extended the channel reach for equipment systems and cutting, soldering and brazing solutions in Europe. It 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 launches are likely to be conducive to the company’s long-term growth.

Lincoln Electric Holdings, Inc. Price and Consensus

Lincoln Electric Holdings, Inc. Price and Consensus
Lincoln Electric Holdings, Inc. Price and Consensus

Lincoln Electric Holdings, Inc. price-consensus-chart | Lincoln Electric Holdings, Inc. Quote

Zacks Rank & Stocks to Consider

Lincoln Electric currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Industrial Products sector are AptarGroup, Inc. ATR and Roper Technologies, Inc. ROP, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

AptarGroup has an estimated earnings growth rate of 8.7% for the ongoing year. The company’s shares have gained 34% in the past year.

Roper Technologies has an expected earnings growth rate of 9.4% for the current year. The stock has appreciated 37.7% in a year’s time.

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