ITW Ltd, the UK-based wholly-owned subsidiary of US giant, Illinois Tool Works, has published its 2020 annual report, detailing the coronavirus impact on the division’s finances.
ITW owns a number of well-known foodservice equipment brands, including Hobart, Foster, Avery Berkel and Bonnet, although its business isn’t exclusively wedded to the hospitality sector.
It also has manufacturing interests in automotive OEM, construction, polymers and fluids, and electronics.
Like most businesses, the Covid-19 virus has had a negative impact on the firm’s customers and consequently materially affected the results of the company for the full 2020 financial year.
In the 12 months to 31 December 2020, the overall UK division generated £695.3m in turnover, 17%/£145.4m down from 2019’s £840.7m. The company reported this was due to a reduction in goods sold, sale of services and royalty income.
Operating profit in the year decreased by £67.8m or 41% from 2019’s £166.9m to last year’s £99.1m. ITW Ltd cited that this was mainly due to the decline in sales income, but was partially offset by lower administration and distribution costs compared to the prior year.
The company also recognised grants of £5.6m from the government’s Coronavirus Job Retention Scheme within other income.
These figures cover all of ITW Ltd’s market areas, but the annual report also breaks down turnover into its divisions. The food equipment division fared worse than the overall company with a 30% sales cut, from 2019’s £205.8m to last year’s £143.4m.
However, looking at the overall results, ITW Ltd director Giles Hudson revealed: “65.9% of the company’s turnover is conducted overseas, compared to 63% in 2019. However, by selling worldwide, the company is able to mitigate any risks associated with a downturn in the UK economy. By diversifying across seven separate sectors the reduced activity and profitability in one part of the business can be offset by positive results in other sectors.
“ITW Ltd through its own strong cash generative trading performance and that of its subsidiaries was able to fund dividend distributions of nearly £44m during the year. Despite Covid-19 impact the business, cash of £162m was able to be built up by the end of the year, demonstrating the financial resilience of the company.”
As of 31 March 2021, Illinois Tool Works Inc as a whole had $2.5bn of cash and equivalents on hand.
Furthermore, the UK company actually increased its research and development expenditure during the year, from £91.8m in 2019 to £92.3m in 2020.
Looking ahead, Hudson concluded: “The company expects the general level of activity to be maintained in the forthcoming year.
“Following the UK’s departure from the EU, the directors do not consider Brexit will have a material impact on its operations for financial year 2021. However, the company is closely monitoring the situation and will take appropriate action if deemed necessary.
“Despite the current uncertain worldwide economic outlook, the company’s forecasts for its wide range of businesses, which operate across different geographical locations, show that the company is well-placed to manage its business risks successfully.”