One of the best ways to develop a picture of any company is with a SWOT analysis -- a look at a company's strengths, weaknesses, opportunities, and threats. Today, I'd like to focus on Manitowoc (NYSE: MTW), a global leader in crane production and foodservice equipment.
Strengths
- Leading manufacturer of foodservice equipment: Manitowoc is the sole provider of all kitchen equipment for many large restaurant groups such as Buffalo Wild Wings (Nasdaq: BWLD). The company became a leading manufacturer in the food-service equipment space through superior innovation, along with its recent acquisition of London-based foodservice equipment leader Enodis.
- Domestic leader in crane distribution: Manitowoc is an industry leader in all segments of crane production, including crawlers, tower, boom truck, and mobile telescopic cranes. The company has more than 27% market share in the U.S., while its closest competitor, Link-Belt, controls only 9%.
- Diversification of revenue streams: Before their purchase of Enodis, more than 80% of Manitowoc's revenue streams came from the crane segment. Today, only 60% of revenue comes from the crane segment, with the food-service segment producing the other 40%.
- Global footprint: While the majority of Manitowoc's business is domestic, the company has a strong presence in Europe, Asia, South America, and the Middle East.
Weaknesses
- Debt: Manitowoc carries about $2.2 billion of debt on its balance sheet, with a cash balance of just more than $100 million. The company will need to see continuous improvement in its profitability to remain comfortable at such levels.
- Business cyclicality: While the purchase of Enodis to bolster the company's food-service unit will certainly help diversify Manitowoc, the construction industry is extremely cyclical. At current debt levels, another serious economic downturn would cripple Manitowoc's balance sheet.
Opportunities
- Emerging markets for fast food: Fast-food chains are beginning to put growth back on the front burner as the global economy improves. Thanks to its unique technology, Manitowoc is well-positioned as a leading provider for growing global companies such as McDonald's (NYSE: MCD), Yum! Brands' (NYSE: YUM) KFC and Pizza Hut, and Starbucks (Nasdaq: SBUX).
- Emerging markets for cranes: On the company's most recent conference call, executives were excited about construction demand from Brazil (for the 2016 Olympics), Turkey (for new growth in power plant production), and the Middle East, where schools, hospitals, and banks are being built like never before.
Threats
- Business growth in China: Manitowoc was ahead of the Chinese building craze, and it's still the market leader in the region. However, today there are more than 10 local competitors in the crane industry; five years ago, there was one.
- Currency risk: European's economic problems, coupled with volatile global markets, have roiled the currency exchanges. Global corporations with significant exposure to more than one currency always face this risk, but recent weeks have seen unprecedented volatility. Manitowoc's most recent annual report suggested that this type of volatility could have considerable cost effects because of the company's increasing global presence.
What parts of Manitowoc's SWOT need more detail? Fill in the blanks by using the comments section below.
