Greatbatch’s diversification has helped earnings rebound
Greatbatch Inc. chief executive Thomas J. Hook is a big believer in diversity.
Since taking over as the top executive at the Clarence medical products manufacturer, Hook has used a series of seven acquisitions to broaden Greatbatch’s offerings beyond the medical batteries that long accounted for the bulk of its sales.
Now, that battery business makes up about half of Greatbatch’s nearly $550 million in annual revenues, down from 85 percent just three years ago. That shift happened because of Greatbatch’s acquisition spree in 2007 and 2008, which added new businesses, such as orthopedic and vascular access products, to the Greatbatch line. Those products now account for more than a third of the company’s sales.
“We knew we needed to diversify,” Hook said Friday, following the company’s annual shareholders meeting.
The results have been good, so far. While the acquisitions cut into Greatbatch’s earnings in 2007, cost-cutting and an aggressive plant consolidation program helped earnings rebound last year by 23 percent, while sales soared by 72 percent.
The trend continued in the first quarter, with Greatbatch’s profits beating analyst expectations as sales grew by 14 percent. While Greatbatch does not issue earnings guidance, company officials expect the firm’s sales this year will rise by anywhere between 1 percent and 10 percent to between $550 million and $600 million this year.
Greatbatch continues to look for ways to cut costs by consolidating its manufacturing and back-office operations. “We have a lot more to leverage across the company,” Hook said.
The company is consolidating its research and development operations in Clarence, and Greatbatch also completed the consolidation of factories and offices in Pennsylvania, Massachusetts and Minnesota during March and April, while moving ahead with plans to shift its commercial battery operations in Teterboro, N. J., to its new plant in Raynham, Mass. Greatbatch employs about 800 people in Clarence and at its Alden battery manufacturing plant.
Greatbatch also is consolidating the range of different brand names it had been using, many acquired during its spate of recent deals, under the Greatbatch Medical name for its medical products and Electrochem for its commercial battery operations.
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