24.04.2013

Profits more than double at Terex Cranes

Terex Cranes has reported a strong pick up in operating profits on revenues up just over three percent.

Total revenues were $470.9 million just over three percent higher than in the same quarter last year, while operating profits were up 2.5 fold to $32.5 million from $13 million in 2012.

The backlog/order book at the end of March was down very slightly on the quarter to $634.2 – but over 18 percent lower than it was a year ago.

The Material Handling and Port Service business had a bad start to the year with revenues down almost 23 percent, while operating profits plummeted from just $600,000 last year to a loss of $29 million this year.

Terex as a whole saw revenues slip just over five percent to $1.72 billion, while pre-tax profits improved 14 percent to $34.4 million.

Chief executive Ron DeFeo said: “Our business performance was mixed in the first quarter. We are encouraged by the performance of our Aerial Work Platform business, which continues to reflect the strong end-market dynamics of the rental channel, particularly in North America. Our Cranes and Materials Processing businesses also positively contributed to our results and performed generally as expected. However, we have seen significant global revenue shortfalls in our Material Handling Port Services business, with particular weakness in Europe and India. Our Construction business is also reflecting the challenges of a less certain customer base in Europe.”

“As a result, we are initiating additional actions in the second quarter to further adjust the cost structure of the MHPS and Construction organisations to better reflect the reduced demand for certain of their products. We anticipate that we will be incurring restructuring and related charges of approximately $30-$50 million in the MHPS segment in the second quarter, and expect to realise a similar amount in savings over the next 12 to 24 months.”

“Terex remains focused on improving profit through organic means, integrating the businesses more thoroughly, and generating consistent free cash flow. We reiterate our annual outlook of earnings per share to be between $2.40 and $2.70 per share, on net sales of between $7.9 billion and $8.3 billion.”

Vertikal Comment

This is a good result for the Cranes division, with a strong bounce back in terms of sales and even better pick up in terms of profitability.

At the same time the Demag/Gottwald port and overhead crane business has suffered significantly over the past quarter, and is not currently looking like it was a good acquisition – that should change though as its rationalisation plans begin to take effect and new operating efficiencies kick in.