Supplier update
BGC Group may be sold: sources
Duragroove panels and Stratum weatherboards are part of BGC Fibre Cement's timber effects range
Duragroove panels and Stratum weatherboards are part of BGC Fibre Cement's timber effects range
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Stanley Black & Decker pricing, Home Depot deal and new Portwest site in Australia
HNN Sources
BGC Group's rumoured sale is expected to be pitched towards Australian and offshore building and construction companies and private equity groups; power tool maker Stanley Black & Decker forecasts headwinds from cost inflation and tariffs; Irish-owned workwear firm opens Melbourne warehouse.
BGC Group potential sale

The Street Talk column in the Financial Review reports that building materials supplier BGC Group has hired Macquarie Group's investment banking team to run the company's mooted sale.

Sources told the newspaper that investment bank Macquarie Capital was chosen following a pitching process run by BGC Group's board. Macquarie's bankers are expected to start working with the company with a view to having a formal sale process up and running in 2019.

BGC Group generated $2.7 billion in revenue last year and is likely to be worth more than $2 billion. It has been controlled by late founder Len Buckeridge's sons, Sam and Andrew, since 2014.

The board - working on behalf of the company's family shareholders - is understood to be keen to sell the business in one piece, if possible. It believes there are material synergies between the industrial businesses. For example, raw materials for its building materials can be sourced cheaply from the company's network of quarries and the like, and flow into the residential construction arm, which is the country's biggest home builder.

The sale is also expected to include BGC's civil and mining contracting business, which has about $1 billion in annual revenue and services clients across the retail, energy and infrastructure sectors.

However BGC Group's real estate portfolio, which owns office buildings and other commercial property, is expected to be sold separately.
Stanley cuts costs, gains exclusivity deal

Stanley Black & Decker (SBD) announced a USD250 million cost reduction program during its third quarter earnings announcement in late October. The company cited "external headwinds" that included new tariffs, commodity inflation and foreign exchange.

As a result, the company will increase prices for many its tools to mitigate the impact of tariffs the Trump administration placed on Chinese imports. Donald Allan Jr., SBD's executive vice president and chief financial officer, said in a statement:
As we shift to 2019, we are now preparing for the carryover effect of the 2018 headwinds...We will continue to pass on these input cost increases to our customers as price increases. Additionally, we are taking actions to adjust our supply chain and cost structure.

President Donald Trump announced tariffs on billions of dollars of goods earlier this year as a way to try and force China to change trade practices he believes are hurting US manufacturers. Tariffs on certain goods will rise from 10% to 25% at the start of 2019. While the tariffs help US producers competing against overseas companies, they also hurt global companies that purchase raw materials from China as part of their supply chain.

Company executives said during an earnings call that they have been preparing their plan for dealing with tariffs since the trade war began earlier this year. Mr Allan said the products affected will include mechanics tools, power tool accessories vacuums and some hand tools.

CEO James E. Loree said he is not worried about losing demand as a result of price increases because the US economy remains strong.

SBD has favourable positions against its competitors because 50% of the company's North American sales are supported by tools production from North American facilities, Mr Allan said. The company has projected a USD35 million tariff impact in 2018.

The cost-cutting measures would be completed by year-end and the majority of the pricing actions will be implemented in early first quarter 2019, according to Mr Loree.
Q3 and The Home Depot

SBD reported third quarter net sales of USD3.5 billion, a 4% increase from third quarter 2017 net sales of USD3.4 billion. Net earnings declined 9.5% to USD248.3 million from net earnings of USD274.5 million in the same period last year.

Tools and storage net sales increased 3% during the quarter due to a volume increase of more than 5% and a price increase of more than 1%. Industrial net sales increased 10%, partially due to acquisitions while security net sales increased 1%.

Its Stanley Tools subsidiary also announced that it has signed an exclusive agreement with The Home Depot for hand tools and storage products, starting in 2019. The deal includes in-store and online sales, along with the retailer becoming the exclusive retailer of Stanley's Fatmax tape measure brand.
Workwear brand expands in Australia

Irish safety clothing and workwear manufacturer Portwest is investing AUD10 million in its Australian operations.

Portwest said its latest investment will allow the company to continue its global expansion and increase its Australian workforce over the next four years. The announcement was made at the official launch of Portwest's new state-of-the-art warehousing facility in Melbourne. Harry Hughes, CEO of Portwest, told the Irish Independent:
Our vision for the company is clear, by selling more products, in more countries, through more sales people selling to more customers, Portwest will continue its strong growth. Our sights are firmly fixed on our new markets of Australia and the USA where further investments in warehousing, staff and an outstanding pipeline of new designs and innovations will drive this growth.

The company paid AUD10 million for Huski, an Australian workwear brand earlier this year, and AUD7.5 million for Melbourne-based Prime Mover Workwear in 2017.

Portwest's brand is sold in over 130 countries. The family-run business has been based in Mayo, Ireland for over a century where the now global company is run by brothers, Cathal, Harry and Owen Hughes.

To read more in Supplier Update, download the latest issue by clicking on the following link:
Supplier Update - HI News Vol. 4 No.8
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