Capital goods winners study: Power tools
Cost measures supporting profitability as focus shifts to structural transformation
Performance
After a challenging 2023, market conditions remained difficult for power tool/OPE players in 2024. Most experienced further falls in revenues, with demand again low in most regions and customer segments. OPE was worst affected. However, many players managed to improve profitability by addressing costs. Key measures included traditional SG&A levers and operational performance improvements, such as streamlining portfolios and cutting direct material costs. Significant progress was made in reducing COGS, for example, through supplier negotiations.
"In the power tools industry, the past two years have been defined by efforts to stabilize and manage margin pressure. In 2025, the focus will shift toward structural transformation."
Trends & challenges
Growth remains a key challenge in the segment, with 2024 the third consecutive year of growth pressure. Mixed business sentiment reports suggest topline growth will continue to be limited.
Elsewhere, traditional go-to market models are struggling as the classic customer journey continues to erode, putting customer loyalty at risk. Increasing competitive pressures are compounding sales problems. Home turfs are under attack as cross-regional expansions intensify, while the convergence of traditional segments is accelerating. The threats of tariffs and supply-chain disruption also remain.
CEO action plan
- De-risk and optimize supply chains through nearshoring and better alignment with end-markets.
- Define long-term positioning by realigning portfolios and preparing for a more competitive landscape.
- Pursue growth opportunities via M&As, partnerships, untapped markets (e.g., Global South), and alternative business models.
- Transform operations and boost resilience by adapting the operating model regionally, strengthening commercial/R&D agility, and shifting from quick cost wins to structural efficiency.