Grime fighter Donaldson is cleaning up the industrial world. The company makes filtration systems designed to remove contaminants from air and liquids. Donaldson's engine products business makes air intake and exhaust systems, liquid-filtration systems, and replacement parts; products are sold to manufacturers of construction, mining, and transportation equipment, as well as parts distributors and fleet operators. The company's industrial products include dust, fume, and mist collectors and air filtration systems used in industrial gas turbines, computer disk drives, and manufacturers' clean rooms. Founded in 1915, Donaldson now operates in 43 countries worldwide and has 39 manufacturing plants.
A global player, the company has generated an increasing amount of its revenues from outside the US in recent years, although the US accounted for more than 40% of the company's net sales in 2011. Europe contributed about 28% of sales in 2011, and the Asia/Pacific region another 24%. Donaldson has six distribution centers, located in Indiana in the US and abroad in Australia, Belgium, Italy, Mexico, and South Africa.
The company is pursuing a strategy of growth through the diversification of its products and technologies to limit the impact of any weakness in a product line, market, or geographic region. Pivotal to its growth plan, which includes both acquisitions and organic growth, are investments and improvement initiatives that target $3 billion in revenues by fiscal 2016. Donaldson has acquired a number of companies to build its global brand base with 30 major brands, including Duratek, Formix, PowerCore, Synteq, Tetratex, and Ultrafilter.
The company has also grown organically with investments in operations such as liquid filtration, where it upgraded capabilities that targeted hydraulic fluid systems in mobile equipment, manufacturing plants, and aerospace markets. It is also investing in global R&D and product development, and has completed new labs in growing markets such as China and India. In addition, it has expanded its manufacturing and distribution operations worldwide, including an upgrade of a Chinese campus.
Having global operations helped drive sales to a record $2.3 billion in 2011, up 22% from $1.9 billion the previous year. Foreign currency translations alone increased sales by nearly $50 million. Other factors affecting the company's sales included a rebound in the economy, Donaldson's continual improvement initiatives, growth in emerging markets, new product launches, and expansion of distribution capabilities. Foreign currency translations also contributed to a record 36% hike in net earnings, which reached $225.3 million in 2011.
Donaldson's Engine Products segment saw sales increase in all end markets and regions except for its aerospace and defense products. Improved volume at the manufacturing plants and stronger demand were key drivers of the growth. Better global economic conditions leading to greater demand helped increase sales in the Industrial Products segment. Donaldson expects continued growth in many of its markets and in emerging economies will result in sales ranging between $2.5 and $2.6 billion in 2012.
Donaldson also budgeted $100 million in capital spending to support its strategic growth plan. As part of that plan, in 2011 it announced an expansion of its manufacturing capacity, including a new air filter plant in Aguascalientes, Mexico. The 140,000 sq. ft. facility, an addition to facilities it already owns in the region, will manufacture air filters for the company's markets in Latin America.
That same year, Donaldson's sold its Ultracool chiller business, based in Terrassa, Spain, to LAUDA, a German manufacturer of temperature control equipment. – less