21.04.2011

Genie jumps 75%

Terex AWP/Genie has reported first quarter revenues up 74.7% compared to 2010 and returns to profitability.

Revenues for the period to the end of March were $376.8 million with an operating profit of $6 million, compared to a loss in the same period last year of $20.3 million. The company’s order book at the end of March was $445.4 million more than double what it was in March 2010 and 45 percent higher than it was at the start of this year.

The company said that the North American market continued its recovery, with increased capital expenditures from both large and medium sized rental customers related to fleet replacement. All other regions experienced strong growth, especially Western Europe.

Terex as a whole saw its revenues increase by over 34 percent to $1.26 billion, with a pre-tax profit of $10.2 million, compared to a loss in the same period last year of $114.2 million.

Chief executive Ron DeFeo said: “Overall, the first quarter results were largely in line with our expectations. Order activity continues to accelerate, and demand has picked up sharply, leading to increased quarterly sales in most of our businesses. This is most evident by the significantly increased backlog seen in all four of our segments at the end of the first quarter.”

“Somewhat offsetting favourable demand trends are increased input costs, mostly associated with purchased materials such as steel, hydraulics, tyres and other manufacturing components. In response, we have recently increased pricing in an effort to regain the profitability we would expect from each product line. We also see some potential risks associated with component availability and are monitoring our supplier base closely.”

Our Aerial Work Platforms (AWP) business has seen a substantial increase in demand from the North American rental channel, with backlog up approximately 123 percent from this time last year. We have initiated pricing increases in AWP starting with deliveries scheduled for late in the second quarter of 2011. However, the current operating margin reflects the impact of orders placed early in the recovery without the benefits of the new pricing structure or the benefit of operating efficiencies as we accelerated production to meet the increased demand.

Vertikal Comment

A very positive result however you look at it, the signs are good for the year as a whole, with the only dark aspect being the inflationary pressures on key components. However the rising prices – so early in the pick-up – will have a positive overall impact for rental companies, in that it may discourage contractors buying new equipment- encouraging them to rent more, while causing used equipment prices to rise, helping to strengthen rental companies underlying balance sheets.

It will also hopefully encourage rental companies to continue to firm up their rates in order to reflect the rising cost of the new equipment.