28.01.2011

JLG dips back into red

Oshkosh has reported its first quarter results which show that JLG slipped back into the red during the period, due to the loss of most of its intercompany defense work and some one-off charges.

Order intake was well up with the order backlog more than tripling to $380 million.

Access revenues for the quarter were up over 30 percent to $290.6 million, but intercompany sales to Oshkosh were down from $531 million last year to just $36.7 million this year. Total revenues for the three months were therefore $327.3 million compared to $753.7 million in 2010 – a reduction of 56.6 percent.

JLG made an operating loss for the period of $16.7 million, compared to a profit last year of $13.3 million. The switch was driven by the steep reduction in intercompany sales, along with $11.3 million of restructuring costs for the European business, possibly relating to the headcount reduction announced this morning at Maasmechelen.

The company says that it may incur a further $2 to $7 million of restructuring costs during the fiscal year.

Oshkosh chief executive Charlie Szews said: “During the quarter, our access equipment business experienced stronger year over year order demand as our North American customers were replacing their aged fleets and as our sales teams grew our business in emerging markets. As a result, backlog rose sharply in the segment.”

Oshkosh as a whole saw revenues drop 29 percent to $1.7 billion while pre-tax profits fell just over 48 percent to $142.6 million.

Vertikal Comment

JLG benefited hugely last year from building component modules for Oshkosh, albeit at low intercompany margins. It did however help the business pull through the worst recession in living memory and help maintain its skilled workforce.

With the contracts that JLG was working on coming to an end it had to return to living off of the regular access market. And with revenues climbing and a growing order book the company ought to have a reasonable year, although still very weak compared to the glory days of the 2006 to 2008.

While it is depressing to see red ink again there is still a good deal of positive news within these numbers. Hopefully the upward trend will continue and the second quarter will be back in the black.