05.08.2005

Terex Cranes rise 32%

Terex Cranes continues to benefit from the improving world crane market, with sales at all of its non American operations well up on the same period of 2004.

Revenues for the first half were $641 million compared to $486 last year, an increase of 32 percent. Tower cranes continue to shine while North American sales continue to disappoint. However US sales of Rough Terrain cranes and boom trucks have started to recover.

Gross profit for the division rose by 20 percent to $77 million, falling as a percentage of sales to 12 percent compared to 13.2 percent in 2004.

Sales and admin costs rose by 21 percent, falling as a percentage of sales to 8.6 percent. This company put the increases down to an increased bad debt provision along with increased incentives.

Operating income increased by 18 percent to 22 million, falling as a percentage of sales, but the second quarter showed a stronger trend, thanks to the benefit of earlier price increases finally beginning to bite.

The Crane backlog was up by 10 percent to $314.7 million. Indicating a possible revenue for the full year in the region of 1.2 billion.

"The Terex Cranes group continued its improvement over last year's performance," commented Steve Filipov, President of Terex Cranes. "As in the first quarter of 2005, our business experienced an increase in sales due to generally improving market conditions. Our Italian, French, American, and Australian operations all posted substantially increased net sales when compared with their 2004 results. In North America, the growth was mainly attributed to recovering rough terrain and boom truck crane markets. Also positively impacting our business were the price increases we put in place late in 2004, which were intended to recover margin erosion over the past twelve months due to increased input costs."

"As has been the case for the past few years, much of the North American business struggled to meet our profitability expectations. We are actively pursuing sourcing initiatives to reduce the cost of components, with Terex's Acuna, Mexico facility playing a vital role in this effort”. Continued Filipov,

“Additionally, since March 2005, we have increased our direct workforce at our Waverly, Iowa location by over 40%, and as of June 27, 2005, we have started production at Waverly on a second shift. These actions should allow us to better absorb our overhead costs, begin to deliver some of our higher priced backlog, and position our business for the anticipated marketplace recovery."

Terex Group

Terex Corporation group sales rose by 35 percent to $3.2 billion compared to $2.4 billion in 2004.

Net income after special items rose by 43 percent to $109 million.

Special items for the second quarter of included charges for investigation costs associated with the Company's internal review and restatement of its financial statements for the fiscal years 2000, 2001, 2002, and 2003, and charges relating to general corporate restructuring.

"Terex continues to gain momentum, both in the marketplace and from our internal initiatives," said Ronald M. DeFeo, Terex's Chairman and Chief Executive Officer. "Our incremental margin was 13%, well above the 6% we achieved in the first quarter of 2005. We have a commitment to fulfilling customer demand and growing our products' presence in the marketplace while improving operating margin through price realization and enhanced manufacturing efficiencies. We are pleased with the over 50% increase in net income and EPS for the second quarter versus last year, excluding special items." DeFeo added,

"I remain optimistic about our prospects for this year and beyond, and feel that our progress on all fronts, particularly in profitability, capital structure, and the Terex Business System implementation, are delivering disproportionately higher returns on invested capital versus our peer group. This will provide meaningful returns to our stakeholders. Many of our businesses contributed to this strong second quarter earnings performance, but we still have operational opportunities to improve. A number of our end-markets have yet to meaningfully contribute to our overall profitability. As such, we view this quarter as a good step along the path to our previously stated longer term objectives."

"Additionally, during the second quarter of 2005, we reduced our net debt by $139 million. This results from continuing efforts to improve our effective use of working capital as well as improving profitability and our corporate focus on generating strong incremental ROIC. We expect to pay down debt in the short term, continue to strengthen our capital structure and position the Company to retire our expensive bonds in 2006 with cash, which has been another of our previously stated goals." DeFeo continued,

"We continue to make progress on our financial restatement process," said DeFeo. "While I am not able to provide closure to the process at this point, I believe I can state that resolution of this matter is a short time away. We again would like to stress that, although this has been a prolonged process, the expected impact on our stockholders' equity at December 2003 will not be material."