02.08.2016

Tough quarter for Genie

Terex AWP/ Genie has reported a fall in first half revenues and profits thanks to a tough American market.

Total revenues for the six months were $1.14 billion, 7.6 percent down on the same period last year, while operating profits were 26 percent lower at $220.6 million. The order book/backlog at the end of June was 22 percent lower at $342 million.

In the second quarter sales fell 13.7 percent to $593.7 million, while operating profits dropped 31 percent to $72.5 million. Sales in Western Europe showed some strong improvement, but now but a sufficient volume to offset the fall in the Americas, not helped by the weaker European currencies.

Terex as a whole reported half year revenues of $2.41 billion, six percent lower than last year – for the ongoing businesses. On the same basis, pre-tax profits were over 78 percent lower at $24.4 million

Chief executive John Garrison said: “Our second quarter results reflect a company in transition. With the pending sale of our Material Handling & Port Solutions business and parts of our Construction portfolio, we made several structural changes in the quarter. Going forward, we will be a more focused company, centred around three segments: Aerial Work Platforms , Cranes, and Materials Processing.”

“We continued to face challenging markets in the second quarter. The North American market for many of our aerial work platform and Crane products was lower than last year, as expected, which was reflected in both our sales and orders in the quarter. We grew aerial lift sales in Europe and parts of Asia, but not enough to offset the softness in North America.”

“We remain focused on what we can control. The steps we took earlier in the year to reduce SG&A helped offset some of the impact of soft markets and competitive pricing, but more is needed. In the second quarter, we took additional steps to simplify our manufacturing footprint and lower our cost base. After the sale of MHPS, Terex will be a smaller company. We are committed to reducing our cost structure accordingly”.

“On a comparable basis, we believe our earnings per share and net sales for the full year 2016 will be consistent with our previous guidance. As a result of accounting for MHPS as discontinued operations, we now expect earnings per share from continuing operations to be between $0.85 and $1.15, excluding restructuring and other unusual items, on net sales of $4.3 billion to $4.5 billion.

This reflects the removal of MHPS earnings from continuing operations and the impact of unabsorbed corporate management costs, but does not reflect any of the benefits of the sale of MHPS which will be realised upon completion of the sale.”

Vertikal Comment

This is not a great result for Genie which seems to suggest that might be falling behind its main competitor JLG, although both are suffering from the sluggish capital expenditure plans of the largest US rental companies and the results of a stronger dollar. And both are generating similar profit ratios.

Having said that the company will be encouraged that sales in both Europe and Asia have improved, given that both offer a great deal more upside potential at this stage of the various economic cycles. Genie now represents almost half the Terex business and could well benefit from the smaller leaner corporation, once it all settles – probably by the start of the new year.

What will be interesting now is how Skyjack and Haulotte fared in the second quarter. With the current uncertainty the second half is likely to be very similar to the first. While the fourth quarter might just surprise us, many companies will now be focusing more on a better 2017.