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Dover’s Engineered Systems Segment Glimmers Amid Gloom

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Dover’s engineered systems segment’s margins rise in 2Q16

Engineered systems sales were responsible for 35.1% of Dover’s (DOV) total sales and 47% of its total segment profits in 2Q16. Sales in the engineered systems segment were flat at $592 million. Organic gains of 2% and acquisitive growth of 3% were offset by a 1% impact of currency translations and a 4% impact from divestments made last year. Productivity actions and a favorable product mix led to a 130-basis-point improvement in segment margins to 17.6%. A solid growth in the printing and identification business underscored the attractiveness of the product offerings within the unit. The engineered systems segment was the only to show a positive performance among Dover’s segments in 2Q16.

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Business-wise trends in organic sales

Dover’s printing and identification segment accounted for 45% of segment sales in 2Q16. Revenues for this segment surged 15% to $264 million, led by an organic growth of 9%. In industrial (RGI) systems, which made up the remaining 55% of the unit, sales declined 10% to $329 million. The sales decline was primarily due to a 2% organic decline and 7% impact from dispositions.

Bookings and outlook

Bookings increased 2% to $571 million as the organic bookings growth of 14% in printing and identification were offset by a 2% decline in industrial bookings. The overall book-to-bill ratio of 0.96 was due to the printing book-to-bill ratio of 1.01, which was partially offset by the industrial book-to-bill of 0.93.

Key ETFs

Investors interested in trading in dividend-based ETFs could look into the SPDR S&P Dividend ETF (SDY). Major holdings in SDY include HCP (HCP) with a weight of 2.7%, AT&T (T) with a weight of 1.9%, and Chevron (CVX) with a weight of 1.7%.

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