Wielding great welding power, Lincoln Electric, the world's largest maker of arc welders and welding gear by sales, is a global manufacturer of welding and cutting products, including arc welding power sources, consumable electrodes, fluxes, fume extraction equipment, robotic welding systems, and wire feeders; other welding products include regulators and torches. The company also has a leading global position in the brazing and soldering alloys market. In North America, which accounts for 40% of its sales, products are sold through a network of industrial distributors. In addition, Lincoln Electric has an international sales organization that sells to 160 countries.
The company operates 45 manufacturing facilities in 19 countries (Australia, Brazil, Canada, China, Colombia, France, Germany, India, Indonesia, Italy, Mexico, the Netherlands, Poland, Portugal, Russia, Turkey, the UK, the US, and Venezuela).
Lincoln Electric's global presence is supported by five regional operating segments. North America Welding (US, Canada, and Mexico), Europe Welding, Asia/Pacific Welding, and South America Welding address the needs of major end users of its welding and cutting products. Its fifth segment, The Harris Products Group, specializes in cutting, soldering, and brazing businesses.
Sales and Marketing
Customers include metal fabricators, offshore oil and gas explorers, power generation facilities, and shipbuilding, automotive, and structural steel construction companies.
Lincoln Electric's net sales grew by 30% in 2011. The North America Welding segment grew by 29%; Europe Welding segment by 41%; South America Welding by 33%; and The Harris Products Group by 34%. Net sales volume for 2011 increased for all operating segments as a result of higher demand levels from expanding industrial economies associated with the improved global economy and modest market share gains.
The 67% increase in net income in 2011 was primarily due to higher revenues and a 31% growth in gross profits, thanks to pricing increases and higher sales volumes offset by rising material costs and lower margins from the acquisitions. Favorable foreign exchange rates also had a favorable effect on net income, offsetting a 16.4% increase in selling, general, and administrative expenses due to higher bonus costs, and higher selling, administrative, and research and development expenses.
The company grows through acquisitions which enhance its A-to-Z list of offerings and grow its geographic presence. Lincoln Electric bought Weartech International, a producer of cobalt-based hard facing and wear-resistant welding consumables, in 2012. At the time of the transaction, Weartech had annual sales of about $40 million and had manufacturing plants in California and Wales. The deal enhanced Lincoln Electric distribution network and consumable product portfolio. Adding to its automated welding portfolio, that year it also acquired Wayne Trail Technologies, Inc., a maker of automated systems and tooling.
In mid-2011 the company bought most of the assets of Applied Robotics, a manufacturer of CNC cutting tables and accessories, sold in North America under the Torchmate brand name. Lincoln Electric earlier in the year purchased Arc Products, a maker of orbital welding systems and welding automation components, and Techalloy, a producer of nickel alloy and stainless steel welding consumables. The additions exploit opportunities specifically in the nuclear, power generation, and process industries, as well as buoy the company's performance.
Targeting developing economies, Lincoln Electric in late 2010 purchased Russia's Severstal Welding (a subsidiary of OAO Severstal), which includes manufacturing operations and distribution rights to the Severstal brand of welding products. The deal builds upon Lincoln Electric's acquisition of Mezhgosmetiz-Mtsensk (MGM), a Russian maker of welding wire, in fall 2010. Lincoln Electric's first entry into Russia, MGM's distribution network enables Lincoln Electric to tap welding consumables business in Eastern Europe. – less