10.03.2006

Palfinger up 29%

Palfinger, the rapidly growing crane and access manufacturer, saw revenues in 2005 grow by almost 29 percent to €520 million.

Earnings before Interest and Tax were €65 million, up by 56 percent on 2004, while consolidated net profit, increased by almost 76 percent to €48.1 million.

The company’s loader crane division continues to be the driving force of the business and the source of virtually all of its profits. Crane revenues were up by over 25 percent profits rising by almost 65 percent to €72 million.
Please register to see all images

The Palfinger board,(L-R) Herbert Ortner - marketing director, Wolfgang Anzengruber - chairman, Wolfgang Pilz - marketing director, Eduard Schreiner - finance director showing how they have grown, and yet they still fit in their shoes.

Group revenues were boosted by a full years contribution from Bison and the mid year acquisition of Ratcliff. However in spite of a 35 percent increase in revenues for the non crane business, which includes Bison, Ratcliff, Palift, Crayler, Mobiler and Railway, profits in the division nose-dived from a loss of €2.3 million in 2004 to a loss of €6.98 million in 2005.

On the production side of the business, raw material cost increases were fully offset by gains in productivity and other cost savings, production of hydraulic cylinders for example, was successfully moved to Bulgaria as part of the groups long term aim to drive down component costs while controlling the supply chain.

Palfinger says that 2006 has started well and that it anticipates continued positive development in all areas. Management’s focus is, naturally going into development of profitability in the non crane sector, while maintaining crane business profitability. Geographical expansion is targeted at Asia & Pacific and the Americas.

Vertikal Comment

Palfinger is a well run business that is on a roll, the progress that it has made in the Loader crane market over the past few years is nothing short of miraculous. It has done this on the back of excellent product development, a wide product range and concentration on driving down production costs, while maintaining control over the quality of its components.

It has also developed a first class attitude in its dealings with customers, distributors and employees. In essence the Palfinger team is made up of nice people; people that customers like to deal with, but who still manage to be tough determined managers.

However!

Its understandable wish to diversify into other related product areas, is proving to be a major challenge. As long as the management is not intimidated into a cut and run strategy, its diversification should pay off over the long run.

Its greatest challenge though is likely to be the access market. While no breakdown is provided, reading between the lines, the Bison business was most likely a contributor to the non crane divisions increased losses?

The Bison product is first class, innovative and well built, but…..this alone does not guarantee success. The truck mounted aerial lift market has many first class producers, most of them specialists.

The market is not high volume and does tend to be localised. Palfinger will need to decide where its ultimate destination is in the access market. It has succeeded with cranes by offering a full range of top quality products which makes it easy to attract strong distributors and helps them succeed.

The truck mounted aerial lift market is small and units are often sold direct by companies that make only modest profits. Palfinger really needs to consider its strategy very carefully.