21.04.2011

Orders up 30% at Terex Crane

Terex Cranes has reported a fall in revenues and profitability, while its backlog jumped 30% on the quarter.

Revenues fell almost four percent to $398.3 million, with an operating loss of $22.5 million, compared to a loss of $3.1 million in the same quarter last year. However higher order intake pushed the company’s order book up 30 percent compared to the start of the year to just over $1 billion.

Sales were favourably impacted by a recovery in demand throughout the Americas with shipments being driven predominantly by energy and commercial construction applications. Demand remained slow for large crawler cranes worldwide, with the postponement or cancellation of certain wind projects in Germany and the UK. And overall worldwide demand is not expected to recover until later in the business cycle.

Port equipment sales were also slow due to delivery delays, with these deliveries now expected to take place in the second and third quarters of 2011.

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.”

“The economic recovery is taking hold in many major markets for Terex. As we
had previously indicated, we expected our Cranes segment to be challenged in the first half of 2011 as we work through the effects of inconsistent demand for many of our larger cranes during 2010. This was particularly evident in our port equipment line of business, where we had several customers delay delivery in the first quarter, which led to a larger than expected loss for the segment overall. We expect to deliver these cranes during the upcoming months and for our orders and deliveries to improve as we move through the year. Longer term, we are optimistic about our Cranes segment, as we have seen a significant increase in demand from North America, as well as a continued increase in activity in developing markets.”

Vertikal Comment

This result is a little disappointing although not entirely unexpected, however the order intake appears positive and the slower first quarter may well produce a strong second half as delays are shipped and the market continues to gain momentum.

The nuclear concerns following the earthquakes in Japan, may have a negative impact on future orders for the very largest crawler cranes, but could bring some of the German, UK and other wind power projects back on stream as new nuclear projects are put on hold or slowed.

The second quarter crane results will be more indicative of the likely trends for the 12 months ahead.