02.08.2017

Flat quarter for Genie

Genie or Terex AWP has reported a flat second quarter in terms of revenues, with lower profits but with improved order intake.

Looking at the first half to the end of June, total sales were $1.07 billion, just over three percent lower than this time last year. Operating profit fell just over 25 percent to $82.5 million. The positive news is that order intake improved leaving the backlog/order book up 46 percent higher than this time last year at $499 million, although it is down 20 percent on the quarter.

Moving on to the second quarter, sales were roughly the same as last year at $593 million while operating profits were just over 16 percent lower at $60.8 million. But with the improving order intake the company has increased its full year forecasts for both revenue and profit margins. With revenues now expected to come in four percent lower than 2016 compared with the original expectation of a 12 percent fall. On this basis revenues ought to be in the region of $1.9 billion.

The Terex group as a whole, which now comprises just Cranes, Aerial lifts and Material processing, first half revenues were nine percent lower at $2.19 billion, while pre-tax profits improved 22.5 percent to $29.9 million. Net debt at the end of June has been cut to $433.4 million from $1.1 billion at the same point last year.

Terex chief executive John Garrison said: “Our Cranes segment returned to profitability in the second quarter, realising benefits from its restructuring programme. Our Materials Processing (MP) segment continued its excellent performance, growing sales and operating margin for the third consecutive quarter. Aerial Work Platform sales were better than expected on the strength of the North American market, however, operating margins compressed on pricing dynamics, higher steel costs and the strength of the US dollar.”

“Looking forward, backlog in our three segments grew substantially, up 36 percent year over year. This is the second consecutive quarter that we increased backlog in each segment. AWP backlog grew 46 percent including growth in North America, Europe and Asia. MP backlog was up 33 percent and Cranes backlog grew 29 percent.”

“We continue to implement our strategy to focus and simplify the company, and build capabilities in key commercial and operational areas. By completing the sales of our UK and Indian back-hoe loader businesses, we delivered on our commitment to focus our portfolio on our three core segments. In Germany, we signed an agreement to sell our Crane manufacturing location in Bierbach, and reached agreement with the Works Council to proceed with our footprint rationalisation and cost reduction plans. Our ongoing efforts to expand our capabilities in sales execution and account management through our Commercial Excellence initiative is starting to be reflected in our growing bookings and backlog.”

“We continue to follow our disciplined capital allocation strategy. We monetised $277 million of Konecranes shares for a year to date total of $549 million. We repaid the $254 million remaining on our 6.5% notes and repurchased 9.4 million Terex shares for $316 million, bringing our total to 15.9 million shares for $517 million for the first six months of the year.”

“Combining our first half results, with our current view of market and operational expectations in the second half and our ongoing capital market actions, we are increasing our full year adjusted EPS guidance to $1.05 to $1.15. This reflects improved net sales and operating profit guidance.”

Vertikal Comment

While the actual numbers might look a little lacklustre, there are underlying indications that Genie is on the rise as its fortunes improve on a rising market. It has possibly suffered a little in recent times from major changes within the company and its parent. However with a new more focused and less indebted owner there appears to be a renewed focus on customer service improvements, with changes being made to sales and distribution teams, aimed at getting closer to the end customer again.

The market has and is changing of course, with smaller – perhaps more nimble? - mid range competitors such as Skyjack, Niftylift, Haulotte and others gaining ground, while Chinese products – from companies like Dingli and Mantall moving in rapidly on the lower end commodity type products such as small slab scissor lifts. While this might appear challenging for the big publicly-owned players, it will also help boost overall market growth and AWP penetration into the overall work at height market to the benefit of all. So while market shares at the top might slip, there will be plenty of potential for higher revenues and profits in an expanding market.

And with a rejuvenated and more focused Terex, expect to see Genie recapture some of the nimbleness and customer closeness that might have ebbed a little in recent years.

All said and done these numbers set a positive tone for 2017 as a whole, with a distinct possibility that the company will end the year with a better result than even the upgraded forecasts suggest?