25.02.2019

Sales pick up at Terex Cranes

Terex Cranes has reported a solid improvement in full year and fourth quarter crane sales.

Revenues for the full year were 10 percent higher at $1.31 billion, but the company posted a loss of $9.2 million compared to a profit in the same period last year of $2.7 million. No reasons have yet been given for the shift, but it looks as though it may be related to write downs due to thelink[https://www.vertikal.net/en/news/story/32397/](impending sale of the Demag business and the closure of the US crane manufacturing operation,) both of which were announced on Saturday morning.

Fourth quarter sales improved 12.5 percent to $364.5 million, with an operating loss of $45.3 million, compared to a loss in the same period last year of $14.1 million. The company says that the backlog at the end of December was six percent up on the year at $583 million.

Terex Cranes president Steve Filipov said: “In the fourth quarter the Cranes business succeeded in overcoming the material supply challenges that impacted our performance earlier in 2018 – I am proud of the team for meeting our commitments to better fulfil customer demand and return to profitability. The sale of the Demag Mobile Cranes business to Tadano is based on strong industrial logic. Bringing these two complementary businesses together will combine Tadano’s 100 years of experience with Demag Mobile Cranes’ nearly two centuries to create a lifting company capable of bringing new leadership to the industry and continuing to create innovative lifting solutions. I also want to assure our customers that our parts and services team remains firmly in place and committed to providing them with world class support for all of their Terex cranes, and will support their Demag cranes through the transition to the new owners.”

Terex as a whole reported a 17.5 percent rise in full year revenues to $5.12 billion, while pre-tax profits increased 33 percent to $148.7 million. Fourth quarter sales were 16 percent higher at $1.23 billion, with a loss of $45.8 million compared to a profit for the same period last year of $25.4 million, due mostly to a non cash charge of $67 million related to the annuitization of its U.S. pension.

Terex chief executive John Garrison said: “Overall, our global team executed well in the fourth quarter, completing a strong year for Terex. In 2018 AWP grew sales 24 percent for the year and expanded operating margins by 200 basis points, while Cranes continued to make operational improvements and returned to profitability on an adjusted basis in the fourth quarter.”

“We continued to implement the Focus, Simplify and Execute to Win elements of our strategy and made significant progress in our Commercial Excellence, Lifecycle Solutions, and Strategic Sourcing priority areas. The sale of the Demag Mobile Crane business and the decision to exit the mobile crane product lines manufactured at our Oklahoma City facility, will dramatically improve Terex’s operating results by focusing the portfolio on our high performing businesses.”

Vertikal Comment

This is generally positive news from Terex, although it has a feel of an end of an era report, in that the business should no longer figure in the Terex numbers. We have to assume that the underlying profitability numbers are now positive, given the fact that it has sorted out the supply chain problems and increased sales. Although the North American manufacturing business will have faced steep rises in steel costs, not all of which could have been passed on.

Terex Cranes has certainly been regaining its reputation and beginning to see the benefits. It will be fascinating to see how Tadano will do integrate the business into its existing operations.