26.04.2012

Terex/Genie up 36%

Terex has issued its first quarter results which show Genie sales increased almost 36 percent over the same period last year, while maintaining its backlog.

Revenues for the quarter were $513.4 million, 35.7 percent higher than in the first quarter of 2011, operating income increased more than seven fold, from $5.7 million last year to $42.6 million this year. The company’s backlog was over 50 percent higher than at this time last year and up just three percent on the start of the year.

The sales increase was driven largely by strong North American demand as well as significant deliveries in Australia. The strong rebound in profitability came from the higher volumes and price increases, although this was partially offset by some material cost increases.

Terex as a whole reported revenues of $1.82 billion – 45 percent higher than in the same quarter last year, although a significant part of this was the addition of Demag revenues – without this the increase would have been closer to 16 percent. Pre-tax profits were $23 million double that of last year when the company reported $11.7 million – most of the improvement came from existing operations.

Chief executive Rob DeFeo said: “We are pleased that 2012 is developing as planned. While we still have a significant amount of work ahead of us, we have taken a solid step towards our margin expansion and cash flow objectives for the year. In fact, this is the first time in almost 10 years that we have generated positive operating cash flow in the first quarter, excluding the tax payment made this quarter as a result of the divestiture of the Mining business. We have traditionally used cash in operations in the first quarter, but our improved profitability combined with progress in factory efficiency and inventory focus, helped deliver our improved cash flow.”

“Overall, net sales were consistent with our expectations. North America was a strong market for most product categories and we believe the global business environment continues to support growth and increased equipment sales. Although the Chinese market has softened somewhat, this was not unexpected and was built into our expectations for the year.”

“We continue to be cautious about European markets where economic activity has been strong in some areas and weak in others. In terms of segment performance, we are encouraged by the performances of our Aerial Work Platforms and Materials Processing businesses, both of which achieved operating margins in the high single digits giving us confidence that we will achieve our 2012 targets. Our Cranes business improved significantly versus the prior year, with a positive operating margin of approximately five percent in the quarter versus a negative four percent last year on a similar sales levels. Our Material Handling and Port Services (Demag) segment’s operating results were in line with what we anticipated for the quarter.”

Vertikal Comment

This is another very strong result from Genie and suggests that its price increases are holding without having any major impact on volume. Quarterly revenue levels are now getting close to levels not seen since 2007 and 2008, although the margins still have some way to go before they begin to match those days.

Competitively Genie it is now slightly ahead of where JLG’s revenues were in its first quarter to the end of December, but it is significantly more profitable. JLG will report its second quarter shortly, which will be more comparable.

With its strong backlog the company is well on track to have its best year since 2008. The question is how much higher can the business go in the next cycle?