ITW Sees Robust Sales Growth in Asia

Jason Sandefur

Illinois Tool Works Inc. is looking to Asia for robust growth by setting up more business units to achieve $4 billion in annual revenues from its Asia-Pacific operations by 2010\, Reuters reported.
ITW expects Asia-Pacific sales will grow by more than 20% a year between 2005 and 2010. The bulk of the products it sells in the region are produced there, taking advantage of lower costs for materials like steel, according to Reuters.
By 2010 ITW projects Asia-Pacific sales will account for 21% of total sales, up from about 11% in 2006.
ITW currently has 88 business units in nine Asian countries, including 29 businesses in China.
The announcement on Asia came shortly before ITW cut its quarterly profit forecast due to the effects of a slowing U.S. economy. ITW, which reported two months of lower-than-expected base revenue growth, now expects to earn 72 cents to 74 cents a share in the fourth quarter, compared with a previous range of 77 cents to 81 cents.
Following the trimmed forecast, ITW shares fell 2.4% to $46.75 on the New York Stock Exchange.
“It really reflects the softening of the domestic economy,” Longbow Research senior analyst Eli Lustgarte told Reuters. “We’re going to have to get through the next couple of quarters, which in our view is going to be a little dicey.”
Other U.S. manufacturers have also trimmed their outlook. Agricultural equipment maker Deere & Co., heavy equipment maker Caterpillar Inc., and diversified manufacturer Honeywell International Inc. have all warned of slowing activity. �2006 FastenerNews.com