Danaher Corporation (NYSE:DHR) produces high-tech equipment for a broad range of industries, from surgical microscopes to airline smoke detectors. In the conglomerates industry, DHR competes against Goliaths like General Electric Company (GE) and 3M Company (MMM). The company generates slightly more than half of its revenues from overseas. The company earned $11 billion in revenue and $1.1 billion in net income in 2009.
As a conglomerate, DHR can apply its efficient manufacturing operations to many processes. Part of DHR's strategy is to acquire underperforming technology ventures and implement efficient manufacturing operations. In 2009 the company acquired 15 companies. As a retailer, the company is susceptible to changes in the economic environment. The sluggish global economy caused a decrease in the demand for Danaher's products which resulted in net sales falling 12% in 2009.
DHR operates in four segments:
The professional instrumentation segment sells environmental and measurement tools. These tools include calibration equipment, water quality instruments, and petroleum services.
The medical technologies segment manufactures dental, microscopy, and life sciences equipment. Products range from infection control products to surgical microscopes. DHR sells these products to professionals and health care institutions.
The industrial technologies segment manufactures production and packaging line products as well as aerospace & defense products. Industrial products range from motors to brakes and aerospace & defense products range from security systems to smoke detectors.
The Tools & Components segment manufactures tools and industrial parts. Products range from hand tools to gear boxes to automotive tools, with brands including Matco and Sears Craftsman. These products are sold at hardware stores and to automotive end markets.
Part of DHR's business strategy is to acquire poorly-run companies and manage them with more efficient operations. In 2009,t he company acquired 15 businesses for approximately $704 million. The businesses were acquired to complement the company's already existnig units of the Medical Technologies, Professional Instrumentation, and Industrial Technologies segments.
DHR reasons that consumers will buy less because of the potential recession, so the company wants to become less dependent on the U.S. economy. Danaher has turned this negative into a positive by expanding to emerging international markets. The company has had a strong presence in China -- the world's leading emerging market. Slightly more than half of the company's sales come from international markets, of which a quarter come from China. Sales from China represent 6% of the company's total sales.
However, in 2009 the sluggish global economy still had negative effects on the company's bottom line as net sales fell 12% for the year.
Steel is DHR's principle material used in manufacturing. Over the past 5 years, scrap metal price has grown from under $100 per ton to over $550 per ton. DHR also uses oil and gas in manufacturing and transportation. Prices for both have increased, and have caused the company's margins to decline.