17.02.2016

Tough quarter for Terex Cranes

Terex Cranes has reported another tough quarter in terms of both revenues and profits

Looking at the full year total revenues came in at just under $1.7 billion five percent lower than in 2014, operating profits however dropped 33 percent to $57.5 million, while the order book/backlog at the end of the year was 20 percent below the start of the year at $431.9 million.

Moving on to the fourth quarter, revenues slipped eight percent compared to the same period last year, coming in at $437.3 million. Operating profits though plummeted 45 percent to $18.9 million.

Terex as a whole saw full year revenues fall 10 percent to $6.54 billion, while pre-tax profits fell 24 percent to $226.6 million. Net debt at the end of the year was up marginally at 1.36 billion.

Chief executive John Garrison said: “The macro operating environment in the fourth quarter was challenging. Global economic volatility has made our customers more cautious overall, resulting in fourth quarter order activity that was below expectations in most business segments and product categories. On a positive note, free cash flow for the year came in at a strong $290 million, nearly double our 2015 net income. Cash flow generation will be a primary focus going forward.”

“Looking ahead to 2016, we do not see market conditions improving. We anticipate lower fleet replacement from North American aerial work platform rental customers. The oil and gas and commodity market decline will continue to impact demand across many of our products. We are developing and implementing plans to align our cost structure with these market realities. We expect 2016 net sales to be about 10 percent lower than 2015.”

Vertikal Comment

It had looked like Terex Cranes was pulling out of an earlier decline, but it is almost certainly taking a hit from both the translation of its European revenues into dollars and the low oil price effect on some of its cranes, particularly in North America.

The company has some significant new products planned for Bauma and will be hoping to regain some of its mojo as these are rolled out. However it looks like 2016 will be another challenging year, at least through the first half.