In this Research Note, we examine Delta Electronics building automation business, based on their 2021 financial results, investor presentations, growth strategy and M&A.
Delta Electronics is a Taiwanese manufacturer specializing in power and thermal management solutions. The group’s 2021 consolidated sales revenues were NT$314,671 million (USD 10.66 billion), an 11% increase as compared to 2020. The group has three reportable divisions, Power Electronics, Infrastructure and Automation, which is the smallest of the three business areas with 15% of total revenues.
Delta’s Automation Segment includes industrial automation and building automation. In recent years, Delta has been enhancing its portfolio which integrate various IoT-enabled building systems, including building automation, energy management, commercial and industrial LED lighting, video surveillance, access control, as well as indoor environmental quality systems.
Delta’s Automation Segment reported 2021 sales of NT$ 45,881 million (over USD 1.5 billion), an 18% increase on prior year. The revenue mix between industrial automation and building automation is unfortunately not disclosed. However, the building automation sector has been identified as a key pillar of Delta’s growth strategy which has resulted in a series of acquisitions in recent years.
Canadian-based Delta Controls and Austria-based Loytec Group were acquired in 2016, a considerable stake in Taiwan-based surveillance systems provider, VIVOTEK was purchased in 2017 followed on by the acquisition of architectural LED lighting provider, Amerlux in 2019 and video surveillance systems provider March Networks in 2021.
Delta Controls is a leading provider of building automation systems with a network of more than 300 distributors in over 80 countries. The company manufactures all their products at their headquarters near Vancouver, Canada, and offers control solutions for buildings in the commercial, healthcare, hospitality, education, and leisure markets. With around 300 employees, estimated revenues are around $85 million.
In April 2016, Delta reached an agreement to acquire 85% stake in the Loytec group’s Loy Tec Electronics GmbH and Innocontrol Electronics GmbH for 72 million euros.
In October 2017, Delta acquired a 49.2% stake in VIVOTEK, Inc. to strengthen its building automation portfolio. VIVOTEK Inc. (TWSE: 3454) was founded in Taiwan in 2000. The company became a leading brand in the global IP surveillance industry. In 2021, Vivotek has grown into a company of more than 1,000 employees and overall revenue reached NT 5.45 billion ($184.6 million), a 1.67% decrease as compared to 2020.
In March 2019, Delta acquired New Jersey-based Amerlux, a manufacturer of architectural LED lighting solutions, for $90 million. The acquisition enhances Delta’s capability to provide a broader portfolio of IoT-enabled smart green solutions for sustainable buildings and cities.
Delta International Holding Ltd BV completed the acquisition of March Networks, a Canadian-based video surveillance firm, in Dec 2021 for $114 million. Headquartered in Ottawa, Ontario, March Networks is a provider of enterprise video surveillance and video-based business intelligence solutions.
The acquisition of March Networks is expected to strengthen Delta's presence in the video surveillance market and complement its building automation business. CEO, Peter Strom reported in December 2021 that March Networks was on the rebound from a significant slowdown in 2020, when its revenues fell nearly 20% from their pre-pandemic total of more than $100 million amid the pandemic-fuelled global economic slump. Strom expected to recover about half of those lost sales in 202, and is predicting a bullish year in 2022. Buoyed by Delta’s hefty financial backing and expansive global reach, his company is eyeing an aggressive campaign to grab more market share in the hospitality sector while building on its traditional bases in industries such as banking and retail.
With building automation as a major focus in Delta's long-term growth strategy, the company is a serious contender in the global smart buildings market.
This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.