New Hong Kong Billionaire Horst Pudwill Emerges As U.S. Housing Recovery Boosts Power Equipment Exports
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 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 vaccum 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 , 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 masters 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.
A representative of the company had no comment.
Laura He, Contributor