Flowserve is pumped about flow control equipment. After reorganizing in 2010 the company operates through three segments. The flow control division (FCD) makes valves and actuators that control the flow of liquids and gases. The flow solutions group's (FSG) engineered product division (EPD) makes pumps and mechanical seals. FSG's industrial product division (IPD) makes pre-configured engineered pumps and pump systems. Flowserve also provides services that include installation, diagnostics, repair, and retrofitting. Flowserve's client base includes customers in the chemical, oil and gas, power generation, and water management industries. The company operates in more than 50 countries.
Year-over-year sales in 2011 for Flowservice increased about 12%, which included currency benefits of $144 million, thanks to strong sales for all of the company's three reportable segments. Also contributing: two of the company's major customer segments, oil and gas (accounting for 40% of sales) and the chemical industry (18% of sales) enjoyed healthy levels of capital spending in 2011.
The company's largest business segment, EPD, accounting for 50% of sales, enjoyed a year-over-year uptick in 2011 of about 8%, which includes currency benefits of $67 million. The segment's healthy sales resulted in part from increased aftermarket demand in the Americas and more demand for original equipment in Asia/Pacific.
The second largest segment, FCD, soared 23%, which included currency benefits of about $48 million. The segment's sales were lifted by recovery of the oil and gas market and strong demand for Valbart products. FCD represents 33% of sales.
The IPD segment's 2011 year-over-year sales rose about 10%, which includes currency benefits of $29 million, thanks mainly to strong demand for original equipment in the Americas. For this segment the company is developing a product slated for release in 2012 and targeted for distribution in the International Standards Organization market.
In addition to making its 50+ branded products in manufacturing facilities around the world, the company also operates a network of Quick Response Centers (QRC) that provide aftermarket equipment services. Since Flowserve's aftermarket parts and services business has provided a steady source of revenues and cash flows -- accounting for about 41% of sales -- the company will continue to expand this business through its QRC network. The company added six QRCs in 2011, increasing the count to about 120.
Organic growth, acquisitions, technology and innovation, and joint ventures continue to fuel Flowserve's performance. In 2011 the company acquired Massachusetts-based manufacturer of centrifugal pumps Lawrence Pumps. The deal added critical solids-pumping and high temperature technologies necessary to the Flowserve petrochemical and oil and gas clients. Meanwhile, the company has expanded through joint ventures in China, India, Japan, Saudi Arabia, South Korea, and the United Arab Emirates.
The company believes that incorporating advanced technologies into its products will increase the appeal of its product portfolio. To that end, Flowserve has been concentrating on the commercialization of new technologies and has partnered with universities and other experts through consortiums to expedite the development time for new products and services. The company spent $35 million on product development in 2011, up from more than $29 million the previous year. – less