Dover Looks To Harvest Benefits From Recent Acquisitions
December 5, 2011 | By Bob Tita of Dow Jones Newswires
Dover Corp. (DOV) expects overall revenue to grow by 7% to 10% next year, as the diversified industrial company aims to transform a spate of recent acquisitions into higher margins and expanded profits.
Dover has spent nearly $2 billion on 21 acquisitions since 2009. Almost 40% of those deals were in the energy industry where Dover bought equipment brands for drilling, pumping and production operations. Dover also has spend $860 million on acquisitions for its communication technologies business, which includes components for handsets and microphones for hearing aids. The company expects revenue from the energy and communications segments to increase by 8% to 10% next year from 2011.
The company sees organic revenue— which doesn't include revenue from acquisitions—increasing 4% to 7% next year from 2011. Dover anticipates revenue from acquired businesses to add about 3% to revenue next year.
"We're focused on strong margin expansion over the next three years," said CEO Bob Livingston during a presentation to analysts and investors Monday in New York.
Livingston wants to increase Dover's business-segment profit margin to 19% by 2014, from 16.8% in 2011. In recent years, Dover has revamped its operations to lower overhead expenses, centralize operations and to focus on industry sectors with the highest growth potential.
"We've made significant changes in our [business] portfolio," Livingston said. "We continue to make significant progress in the emerging economies of the world, especially China."
The company reiterated its 2011 profit outlook for $4.45 to $4.50 per share. Revenue is expected to increase about 20% from 2010 to $8.2 billion.
The Downers Grove, Ill., company announced last week that its realigning its business segments to support its growth initiatives and make the company's performance easier to measure against other companies.
"I'm convinced we're doing the right thing," Livingston said.
Dover's stock was recently trading up 2.7% at $57.40 a share.