May
22 -- Horst Julius Pudwill, chairman of Hong Kong-based Techtronic Industries,
has emerged as a new billionaire as shares of the power equipment supplier
surged by more than 100% in the past year. With the bulk of its manufacturing
facilities in southern China, the company delivered record revenues and profit
in 2012, boosted by strong sales of power tools and floor care products in the
U.S. and European markets.
Benefiting
from a nascent recovery in the U.S. housing market and strong cost controls,
Techtronic’s group sales increased 8.4% to $3.67 billion in 2012. Profit grew
32% to $201 million. The share price has
climbed 111% in the past twelve months. Pudwill, 69, who owns a bit more than
20% of the company, has seen his net worth jump to over $1 billion, Forbes
calculates.
Pudwill
first visited Hong Kong from Germany in the mid-1970s as a sales and marketing
representative promoting Volkswagen vehicles. In 1985, along with business
partner Roy Chung Chi-ping, he founded Techtronic Industries in Hong Kong,
which had six employees and focused on producing rechargeable battery packs in
hand tools. It later assembled tools for overseas brands. In the 1990s, it
began buying up consumer brands. Today, the company has grown to be one of the
world’s largest suppliers of cordless power tools and floor care appliances. It
employs over 20,000 people worldwide.
In
2000, Techtronic purchased North American power tool operations previously
owned by Japan-based Ryobi Limited. It acquired Milwaukee power tools along
with AEG, from a Swedish group in 2005 for $626 million. In 2007, Techtronic
bought the ailing Hoover brand from Whirlpool WHR -0.34% for $107 million, and
turned around the money-losing business.
Pudwill
retired as CEO in 2008 but remains chairman of the company.
Techtronic
is best known for brands like Milwaukee Electric Tools, Homelite outdoor
products, and Dirt Devil and Hoover vacuum cleaners. Consumers in Europe and
Australia might be more familiar with its Ryobi and Vax brands. Some 74% of
revenues come from the U.S. market and 20% from Europe.
Product
demand in the US is benefiting from a recovery in housing and from the
reconstruction efforts following Hurricane Sandy., J.P. Morgan Hong Kong
analysts Leo Chik and Andrew Hsu said in a recently-released report.
Fueled
by the housing market growth, Techtronic’s largest customer, Home Depot HD
-1.44%, just reported higher-than-expected results for the first quarter of
2013, and raised its sales and profit outlook for the year. Similar to Home
Depot, Techtronic has seen increased demand for tools and power generators
after Hurricane Sandy. Power tool sales
in the U.S. grew 10% in the first half of 2012, the analysts said. Milwaukee,
the primary professional brand for Techtronic, grew by 23.7% driven by strong
demand from U.S. contractors for its new “Fuel” line of brushless motor
products launched recently. In Europe, professional tool sales also grew double
digits.
The
analysts expect lower material costs and an appreciating Euro could help raise
2012 and 2013 EBIT (earnings before interest and tax) margins to a five-year
high of 6.7%, rising to 9.7% by 2015 with increased sales growth. However, the
key risks to its businesses are rising cost of production in China and a
slower-than-expected recovery in US demand.
Headquartered
in Hong Kong, Techtronic maintains manufacturing and research facilities in
Asia and North America, as well as a customer servicing network in North
America, Europe and Australasia. But the
bulk of its manufacturing is in southern Chinese city of Dongguan.
Pudwill
holds a master’s degree in engineering and a general commercial degree. He is
married to Barbara Pudwill. Their son Stephan Horst Pudwill, 37, joined Techtronics
in 2004 and now serves as president of strategic planning. Pudwill lives in Hong Kong and enjoys golf
and tennis.
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