The name Tyco International (TYC) may conjure up images of accounting scandals and jail-bound executives. But that was a long time ago. Today, the Swiss producer of fire, security, and other products is growing at a healthy pace through mergers and acquisitions. Tyco’s revenue in the second quarter of the company's fiscal 2011 came to $3.99 billion, down 2 percent from the same quarter a year earlier thanks to the sale of an electrical and metals unit, which no longer contributes to the top line.
When taking that divestment into account, revenues rose 6 percent. Net income rose 2 percent to $315 million. "We are encouraged by the order trends in our late-cycle businesses, and we expect these trends will help fuel our growth as we finish this fiscal year and enter 2012," says Chairman and CEO Ed Breen.
The company is expanding, especially in the Middle East, where it just bought a 75 percent stake in United Arab Emirates-based KEF Holdings, a valve and steel castings company, for $300 million.
Expect more such announcements to come. "This acquisition gives us a solid platform for growth and expansion in the Middle East region," says Patrick Decker, president of Tyco Flow Control.
"It provides us with a local, fully-integrated manufacturing facility in the region while broadening our product portfolio to serve the needs of our customers worldwide."
Just prior to that purchase, Tyco International agreed to buy for $171.5 million Australia's Signature Security Group from Oceania Capital Partners. Tyco will combine Signature Security's Australian and New Zealand operations with its ADT Security business unit.
Moody's Investors Service recently upgraded its rating on Tyco International Finance, the financial arm of Tyco International, citing an improved outlook for the overall business.
Tyco 's financial metrics will continue to strengthen as demand grows for the company's fire and security services, Moody's analyst Edwin Wiest writes.
The recent sale of the electrical and metal products business should also shield the company from volatility stemming from higher costs and weak construction activity, Wiest adds.
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