01.08.2018

Recovery continues at Terex Cranes

Terex has reported its first half results with crane sales continuing their recent upward trend.

Sales in the first six months were 14.5 percent higher than in the same period last year at $649.3 million, but operating losses increased from $16.5 to $22 million.

Second quarter revenues increased by almost 11 percent to $335.3 million driven by higher demand which was constrained by supply chain challenges. Last year’s operating profit of $15.4 million was converted to a loss of $12.3 million this year. The backlog at the end of June was $602 million - 31 percent higher than at this time last year, but six percent lower than at the end of the first quarter.

The Terex group as a whole saw revenue rise 22 percent to $2.66 billion with pre-tax profits almost five times the level of last year at $143.8 million. Net debt more than doubled to $717.1 million due to substantially lower cash on deposit.

Terex chief executive John Garrison said: “Terex significantly improved its second quarter, as adjusted, earnings per share compared to last year. These strong financial results reflect operational improvements, the considerable benefit of executing our disciplined capital allocation strategy and broad-based improvements in our global markets.”

“Aerial Work Platforms and Materials Processing continue to execute very well. Our Cranes segment improved as expected compared to the first quarter but continued to be impacted by material shortages.”

“We made progress implementing our Execute to Win business system across our three priority areas: Commercial Excellence, Lifecycle Solutions and Strategic Sourcing. The initial benefits of Commercial Excellence are positively impacting our current performance. We will start to see benefits from Strategic Sourcing in the second half of 2018.”

“We remain committed to our Disciplined Capital Allocation Strategy. During the quarter we repurchased 2.9 million shares for $116 million. Over the past 18 months we repurchased approximately 34 million shares, or roughly one third of our outstanding shares. In addition, we recently announced a new $300 million share repurchase authorisation.”

Terex Cranes president Steve Filipov added: “Our tower crane business continues to grow, driven by higher demand in Europe, North America and Asia and our Utilities business continues to perform well in a relatively stable market environment. A critical element of our Cranes improvement plan is to successfully introduce new products. The three axle Demag AC 55-3 All Terrain crane is the latest addition to our portfolio. By reinvigorating our product portfolio, we are re-establishing ourselves as a leader in the All Terrain segment.”

Vertikal Comment

In terms of sales revenues the company had a good first half, with strong first half order intake boosting the backlog. However, the company is clearly struggling with a number of challenges in getting he new models built and shipped. This is also showing up in the lower margins and higher costs, resulting in the higher losses.

The company is though still at a relatively early stage in its recovery programme, with most customers agreeing that the company is making a brisk come back, particularly in the All Terrain and tower crane markets. While the second half is likely to be better, the company will probably be looking forward to 2019 for more positive numbers.