View Annual Report
Total Page:16
File Type:pdf, Size:1020Kb
Our company – every one of us at Snap-on Incorporated around the globe – is dedicated to developing and putting into our customers’ hands the fi nest professional tools, equipment, services and diagnostics. For generations, this passion for design, precision and durability has made our brands indispensable to people who use our products to earn their living. As Snap-on looks to the future, we are reinvigorating our commitment to customers, to bringing innovative new ideas to life, to making it easier to do business with us – and thereby bring solutions and greater value to our customers, our franchisees, our associates and our owners. We have everything we need to succeed. Our markets are diverse and growing. The tools we make are the best there are. Our franchise and sales networks are built for service. And we are driving to cut cost and complexity. All we need to do is make the most of what we already have. 2005 ANNUAL REPORT 662191ge_txt.indd2191ge_txt.indd 0011 22/22/06/22/06 111:54:431:54:43 AAMM MATCH QUALITY & INNOVATION WITH 2 UNSURPASSED SERVICE AND SUPERIOR PROFITABILITY SNAP-ON INCORPORATED 662191ge_txt2191ge_txt 2 22/17/06/17/06 112:59:412:59:41 AAMM PProcessrocess CCyanyanPProcessrocess MMagentaagentaPProcessrocess YYellowellowPProcessrocess BlackBlack448585 Turning Vision to Value The job has begun, and we clearly have more to do. Our people understand the challenge and they’re determined to deliver. The progress we’ve made over the last year — strong new products, a tighter grip on costs, improved margins and better service levels — shows we’re on the right track. We’ve got momentum, and we are building even more. A good example is our innovative Snap-on® MG31 power tool, introduced in 2005. This 3/8-inch air-powered impact wrench, with a one-piece magnesium housing, set a new standard for power and light weight. We expect to accelerate our pace of product innovation in 2006. We expanded geographically, with increased penetration in Eastern Europe, China and ASEAN markets. We are committed to continuing our global growth. The introduction of rapid continuous improvement across our entire value chain began to drive higher operating margins. But we believe even greater productivity gains lie ahead. 3 We increased our on-time order fi ll rates. A good start, but we can do better. All this progress generated increased cash fl ow, and produced a rising share price and a total return to shareholders in 2005 of better than 12%. We know that’s just the beginning of turning our vision for Snap-on into greater value for those who invest in us. BETTER BALANCE FOR BETTER RESULTS Product Expertise, Operating Excellence Snap-on has long benefited from innovative product design, Marketing & Customer in Manufacturing effective marketing and a superior sales network. But our Relationships & Logistics investment in the supply chain – just as vital to our success – wasn’t always as strong. We’re stepping up spending for manufacturing with state-of-the-art machinery, investing in our Aggressive people and processes, sharpening our focus on purchasing and Profitable Growth aligning our distribution centers for improved customer service and lower costs. We have one goal in mind – the best SNAP-ON investment balance to drive aggressive profitable growth. 2005 ANNUAL REPORT 662191ge_txt2191ge_txt 3 22/17/06/17/06 112:59:412:59:41 AAMM PProcessrocess CCyanyanPProcessrocess MMagentaagentaPProcessrocess YYellowellowPProcessrocess BlackBlack448585 4 SNAP-ON INCORPORATED 662191ge_txt2191ge_txt 4 22/17/06/17/06 112:59:412:59:41 AAMM PProcessrocess CCyanyanPProcessrocess MMagentaagentaPProcessrocess YYellowellowPProcessrocess BlackBlack448585 Everyday Heroes Using Legendary Products Say “Snap-on” and the fi rst image that’s likely to come to mind is one of our wrenches in the hand of an auto technician. We’re solidly positioned to serve technicians in the vehicle service and repair marketplace, which is large and growing, with more vehicles than ever in the prime service and repair years and their increased complexity demanding exactly the type of advanced diagnostics Snap-on provides. This growing volume and complexity are also driving the need for a record number of new automotive technicians. We’re making it a point to see that these technicians are trained using our tools, and we estimate that in the United States, almost seven out of 10 are. We know the kind of loyalty our brands inspire. We think the tools and diagnostics that they have a chance to train on will be the tools and diagnostics they choose to thrive on. But that’s only part of the picture. Our portfolio of legendary brands — from Snap-on tools, to BAHCO® saws, to John Bean® wheel service products, to Sun® diagnostics — is also the choice of professionals across a wide range of other growing skilled-service markets and diverse industries. Our products have 5 earned the trust of the everyday heroes who make our assembly lines run, put up skyscrapers, supply our energy, maintain our shipping and airline fl eets and help keep the global economy moving. No matter what job or which industry, by creating value for our customers, we create new opportunity for our company. EQUIPPING THE NEXT GENERATION U.S. SERVICE TECHNICIAN MARKET Demand for new skilled automotive technicians 920,000 is accelerating. With so many current techs AVIATION & retiring during the next 10 years, more than GENERAL 50,000 new technicians will be needed every 877,000 AVIATION & year in the United States to meet the growing GENERAL “net” demand the Department of Labor projects. 1,460,000 AUTOMOTIVE & Many more aviation and general technicians will 1,296,000 DIESEL be needed as well. As these new technicians start AUTOMOTIVE & DIESEL their careers, they will be heavier purchasers of tools and diagnostic products than their end-of- ESTIMATED career counterparts. That’s why Snap-on invests 2004 2014 aggressively to build brand loyalty with each new generation of techs. SOURCE: U.S. DEPARTMENT OF LABOR 2005 ANNUAL REPORT 662191ge_txt2191ge_txt 5 22/17/06/17/06 11:00:25:00:25 AMAM PProcessrocess CCyanyanPProcessrocess MMagentaagentaPProcessrocess YYellowellowPProcessrocess BlackBlack448585 Snap-on O2 Sensor Wrench Snap-on Vantage PROTM Graphing Mitchell1TM CRM Service Meter and Lab Scope Snap-on Pneumatic Snap-on Snap-on MG31 3/8-inch Orbital Sander 3/8-inch Drive Ratchet Pneumatic Impact Wrench 6 Snap-on Level V Keyless BAHCO Pneumatic John Bean Arago V3DTM Tool Storage Secateur (pruning shears) Visualiner® Wheel Alignment with Optical Imaging RATCHETING UP QUALITY FOR 85 YEARS The ratchet wrench with interchangeable sockets is Snap-on’s icon to value. But inside, we’ve engineered new proprietary extra-fine gearing product, and we have never stopped innovating its design. The latest to provide a more precise ratcheting action – important to professionals example is our redesigned 3/8-inch drive ratchet (shown above center working with today’s advanced fasteners and in ever-more cramped and on page 1), which we’ll be introducing in 2006. On the outside, spaces. We’ve proven once again we can teach an old wrench new tricks. it features the same great ergonomic grip our customers have come SNAP-ON INCORPORATED 662191ge_txt2191ge_txt 6 22/23/06/23/06 33:36:14:36:14 PPMM Creating Value with Innovation Product innovation truly means something only when it adds value for a customer. And the chance to add value grows as the marketplace evolves. The more change, the more opportunity. We’re putting our customers at the center of all we do. We stay close, not just to track their changing needs and expectations, but to stay a step ahead. That means digging deep into their applications and practices, asking why something is done, how it might be done faster, better and at less cost or in a totally new way. It’s from this “never-satisfi ed, always-curious” mindset that true ingenuity can spring. We want to be ready with a solution before our customers even see a need. For example, many after-market vehicle repair operations would like to implement more sophisticated marketing programs to help build their business. Our Mitchell1 Customer Retention Marketing (CRM) program gives them a cutting-edge solution. The program tracks every customer transaction and automatically generates personalized postcards and emails to thank customers and remind them when their next vehicle 7 service is due. It’s a great way to build customer loyalty – no small thing since, on average, loyal customers spend three times as much annually with a business compared to new customers. That’s what we mean by creating value with innovation. A HANDHELD EVOLUTION DIAGNOSTICS & INFORMATION GROUP NEW PRODUCT SALES TREND Not long ago, in the late 1990’s, less than one-third of PERCENT OF SALES COMING FROM PRODUCTS the automotive diagnostics market came from handheld INTRODUCED IN THE PRIOR THREE YEARS technology. By 2005, it accounted for more than two- thirds and Snap-on was the clear market leader. It’s easy to see why. With a focus on innovating workplace productivity, coupled with the industry’s most extensive 9% NEW 34% NEW service and repair information database, Snap-on’s strategy of “Instrumentation with Information” puts knowledge, productivity and convenience in the hands of technicians. 91% 66% 1999 2005 2005 ANNUAL REPORT 662191ge_txt2191ge_txt 7 22/17/06/17/06 11:00:33:00:33 AMAM PProcessrocess CCyanyanPProcessrocess MMagentaagentaPProcessrocess YYellowellowPProcessrocess BlackBlack448585 8 SNAP-ON INCORPORATED 662191ge_txt2191ge_txt 8 22/17/06/17/06 11:00:34:00:34 AMAM PProcessrocess CCyanyanPProcessrocess MMagentaagentaPProcessrocess YYellowellowPProcessrocess BlackBlack448585 Supporting Our Franchisees and Delivering Unparalleled Customer Service The linkage is clear – the success of Snap-on depends in large part on the success of our franchisees. Their success, in turn, depends on the value we both can bring to our customers.