24.10.2013

Terex Cranes struggles

Terex Cranes has reported a slip in nine month revenues and operating profits as backlog shrinks.

Total revenues for the nine months were $1.45 billion, two percent below last year, while operating profits declined 27 percent to $84.8 million. The total backlog as of the end of September was $485.4 – 28 percent below that of a year ago, and down 16 percent on the quarter.

Third quarter revenues were $453 a fall of 12.5 percent, while operating income fell 44 percent to $28.9 million

Looking at the Terex group as a while, nine months revenues were $5.4 billion – 3.5 percent lower than last year. Pre-tax profits were flat at $191.7 million. In the third quarter revenues were roughly flat at $1.81 million, while pre-tax profits almost tripled to $109.4 million- most of the difference relates to a $50 million charge last year for early retirement of its debt.

Chief executive Ron DeFeo said: “Our third quarter operating results were as we expected but with a better tax rate, the current environment is mixed overall, and remains challenging to predict. We are seeing strength in early-cycle product categories where demand is mostly replacement driven. We continue to have strong performance from our AWP business and solid execution by our Materials Processing business. As expected, we achieved significantly better performance from our Material Handling & Port Solutions segment compared to the first half of this year. Our Cranes segment continues to experience soft market conditions and our Construction businesses remain challenged.”

“Geographically, the global economy is best described as lacking a clear direction. North America remains the most stable market overall. Europe has seen slight improvements in certain products, mostly in our AWP segment, and the Middle East continues to provide growth. However, overall weakness in Europe and Australia have offset the growth we have experienced in other markets.”

“Our operating margins have remained consistent. However, we expected 2013 to be a year of significant sales growth, and this has not occurred. Our businesses that have a significant portion of products dependent on non-residential construction have not recovered as quickly as we had expected. Businesses that are less dependent on non-residential construction, such as our Port Solutions and AWP businesses, are seeing improving business conditions. This, along with our interaction with customers globally, is what provides a level of support that a broad-based recovery is more a matter of when it will happen, not if it will happen.”

Vertikal Comment

Terex Cranes is going through a challenging time as the business is restructured and changes implemented. It is still in fairly good shape though, and is counting on its new product launches gathering momentum as it moves into 2014.