Danaher Corporation designs, manufactures, and markets professional, medical, industrial, and commercial products and services worldwide. The company's Life Sciences segment provides laser scanning, compound, and surgical and other stereo microscopes. This segment also offers filtration, separation, and purification technologies to the biopharmaceutical, food and beverage, medical, aerospace, microelectronics, and general industrial sectors. Its Diagnostics segment provides chemistry, immunoassay, microbiology, and automation systems, as well as hematology and flow cytometry products. The company offers analytical instruments, reagents, consumables, software, and services for hospitals, physicians' offices, reference laboratories, and other critical care settings. Its Dental segment provides consumables, equipment, and services to diagnose, treat, and prevent disease and ailments of the teeth, gums, and supporting bone. The company's products comprise implant systems, dental prosthetics, and associated treatment planning software; orthodontic bracket systems and lab products; endodontic systems and related consumables; restorative materials and instruments; infection prevention products; digital imaging systems and software; air and electric powered handpieces, and consumables; and treatment units. Its Environmental & Applied Solutions segment offers instrumentation, services, and disinfection systems to analyze, treat, and manage water in residential, commercial, industrial, and natural resource applications. This segment also provides equipment, consumables, software, and services for various printing, marking, coding, traceability, packaging, design, and color management applications on consumer, pharmaceutical, and industrial products. The company was formerly known as Diversified Mortgage Investors, Inc. and changed its name to Danaher Corporation in 1984. Danaher Corporation was founded in 1969 and is headquartered in Washington, the District of Columbia.
Business Analysis of Danaher
The Industrial Goods & Services Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Danaher compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Danaher to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Danaher with an interactive chart.
- Revenue Growth: Danaher reported a revenue growth of 17.0% year-on-year during 2016. Industrial Conglomerates Industry grew at 3.8% in the same period
- COGS share of Revenues: As a percentage of revenue, Danaher spent 44.7% of its total revenues on COGS. Industrial Conglomerates industry average (COGS share of revenue) in the same period was 67.0%
- R&D share of Revenues: As a percentage of revenue, Danaher spent 5.8% of its total revenues on R&D. Industrial Conglomerates industry average R&D spending in the same period was 1.1%
- SG&A share of Revenues: As a percentage of revenue, Danaher spent 33.2% of its total revenues on Sales, Marketing, and General Administration (SG&A). Industrial Conglomerates industry average SG&A spending in the same period was 16.9%
- Inventory share of Revenues: As a percentage of revenue, Danaher spent 10.1% of its total revenues on Inventories. Industrial Conglomerates industry average Inventory spending in the same period was 14.7%
- Accounts Payable share of Revenues: As a percentage of revenue, Danaher invested 8.8% of its total revenues on Accounts Payable (A/P) Industrial Conglomerates industry average Accounts Payable investment in the same period was 12.8%
- Accounts Receivable share of Revenues: As a percentage of revenue, Danaher invested 18.9% of its total revenues on Accounts Receivable (A/R). Industrial Conglomerates industry average Accounts Receivable investment in the same period was 25.5%
- PP&E share of Revenues: As a percentage of revenue, Danaher invested 13.9% of its total revenues on Property, Plants, and Equipments (PP&E). Industrial Conglomerates industry average PPE investment in the same period was 34.0%
- Intangibles share of Revenues: As a percentage of revenue, Danaher invested 211.1% of its total revenues on Intangibles. Industrial Conglomerates industry average Intangibles investment in the same period was 71.2%
- Net Margins: Danaher Net Margins in the year 2016 were 15.1%. Industrial Conglomerates industry average Net Margins in the same period were 9.3%
Sector and Industry Association of Danaher
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
Danaher is associated with Industrials Sector Group, Industrial Goods & Services Sector, and Industrial Conglomerates Industry.
Industrial Goods & Services sector is comprised of the following industries: Industrial Conglomerates; Industrial Machinery; Electrical Components & Equipment; Electronic Equipment & Parts; Containers & Packaging. The definitions for each of the industries is as follows:
- Industrial Conglomerates industry includes Industrial companies engaged in three or more classes of business within the Industrial industry that differ substantially from each other.
- Industrial Machinery industry includes designers, manufacturers, distributors and installers of industrial machinery and factory equipment, such as machine tools, lathes, presses and assembly line equipment. It also includes makers of pollution control equipment, castings, pressings, welded shapes, structural steelwork, compressors, pumps, bearings, elevators and escalators.
- Electrical Components & Equipment industry consists of manufacturers and distributors of electrical parts for finished products, such as printed circuit boards for radios, televisions and other consumer electronics. It also includes makers of cables, wires, ceramics, transistors, electric adapters, fuel cells and security cameras. Manufacturers of Electric motors and generators and mechanical motion control products are also part of this industry.
- Electronic Equipment & Parts industry includes companies offering Manufacturing and Design services for Engineered Components and Products used in different industries. Companies providing Laser-based manufacturing products are part of this industry.
- Containers & Packaging industry includes producers and distributors of cardboard, bags, boxes, cans, drums, bottles, jars and glass used for packaging. Specialty Packaging Products and Pressure-Sensitive Materials producers are also part of this industry.
Industry Ranking of Danaher
With $16.9 billion revenues, Danaher ranked number 4 of all the companies in the US Industrial Conglomerates industry. There were a total of 10 public companies in the US Industrial Conglomerates industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Industrial Conglomerates industry by revenues during 2016 were:
- General Electric ($123.7 billion)
- Honeywell International ($39.3 billion)
- 3M ($30.1 billion)
- Danaher ($16.9 billion)
- Icahn Enterprises ($16.3 billion)
- Illinois Tool Works ($13.6 billion)
- Trinity Industries ($4.6 billion)
- Roper Technologies ($3.8 billion)
- Carlisle Companies ($3.7 billion)
- CSW Industrials ($319.8 million)
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.