26.04.2011

64% growth for Manitou

Telehandler manufacturer Manitou has reported a 64 percent increase in first quarter revenues hampered by component supply challenges.

First quarter revenues were €266 million, 64 percent up in the same period last year, with 20 percent growth anticipated for the full year and a return to profit with low to mid-single digit earnings before tax and interest.

Order intake continues to gather pace, with an order book of more than 10,000 units at the end of March, pushing availability out due in part to erratic component supply causing disruption in production.

The Rough Terrain handling division – largely non-American telehandlers – had sales of €191.5 million in the quarter, up 65 percent on 2010, thanks to a strong pick up in construction and rental company sales.

The Compact Equipment division, largely Gehl which includes North American telehandlers, was up 95 percent to €40.8 million, thanks in part to growing sales of telehandlers to US rental companies.

Geographically Europe – outside of France – was the strongest with revenues up 76 percent to €118.8 million, while French sales grew by 45 percent to €85.1 million. American revenues were €37.7 million, 118.8 percent higher than a year ago, while revenues from the rest of the world were up 33 percent to €24.8 million – but interestingly down 11 percent on the fourth quarter.

Chief executive Jean-Christophe Giroux said: “We enjoyed a great quarter, with the same trends as the preceding ones, but with a double amplification. First, business is definitely firming up across the board, driven by end demand as dealers’ inventories remain at all-time-lows. Secondly, the worldwide operational chain cannot cope with this acceleration, resulting in production delays and slower manufacturing ramp-up.”

“To put it simply, we continue to take orders faster than we can increase our operational throughput and like any other manufacturer, we’re as good as our biggest problem on a given day. The situation is changing all the time and recent events in Japan will inevitably add some more volatility in the system – although this is impossible to quantify at this time.”

“With deteriorating predictability, the most effected are our workforce and our dealers and customers. Our assembly lines have to adjust from technical unemployment to special rush efforts depending on the availability of components, while our dealers have a hard time monitoring their customers’ demand in this context. Having said this, we believe this is typical of any new growth cycle after a severe crisis, when supply and demand takes some time to adjust and balance.”

“We continue to work towards that goal, and accelerate on our efforts to better ride this cycle – processes, products, people, organisation – and we maintain our marching objectives for 2011 and beyond”.

Manitou has also announced that having formally combined the Manitou and Gehl businesses in the USA at the end of March, it will now merge Gehl’s European operations, including its main operation - Gehl Europe GmbH - into the local Manitou entities. Gehl spare parts have already been consolidated into
Manitou’s central parts organisation in Ancenis.

Gehl Europe GmbH will legally merge with Manitou Deutschland at the end of August.

The company has also said that Christian Caleca, most recently president of Manitou’s Rough Terrain Handling division, has decided to leave the group to pursue other opportunities.
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Christian Caleca

Caleca joined Manitou in December 2008 as chief operations officer. A statement from Manitou said: “The board of directors thank Mr Caleca for his service with Manitou, and in particular for his personal stature and attitude at the worst moments in the group’s history”

Vertikal Comment

This is another strong sales result from Manitou and bodes well for the year as a whole. However the company’s profitability will be affected by on-going issues with its supply chain, most of which are outside of its control. Disruption such as it appears to be experiencing can result in not only driving up production costs, but can also have a negative impact on quality control and customer
satisfaction.

While supply chain issues are impacting all manufacturers, especially in the telehandler sector, Manitou is making a much bigger issue of the problem. Either it is being more open and honest, or it has management or supplier relationship problems in this area?

If it wishes to keep up with, or even regain its lead over JCB in the telehandler market it needs to ensure that it is at least as good at keeping components flowing and production running as smoothly as its main competitors. In this aspect it has a disadvantage over both JCB and Merlo in that they both produce a larger proportion of the key components that go into their telehandler products.

Interesting and challenging times