Strong profit uplift for Manitowoc
The Manitowoc crane group, owner of Potain tower cranes, Grove mobiles cranes and National Crane boom trucks as well as Manitowoc crawler cranes has reported its full year results for 2019 with flat revenues, but a strong pick up in profitability.
Looking at the numbers total sales were $1.83 billion less than one percent below that achieved in 2018, partially due to a negative currency effect. Order intake for the year was 13 percent lower though at $1.64 billion, leaving a backlog/order book at year-end of $475.1 million. Pre-tax profit however jumped from a loss of $71.7 million last year to a $59 million profit this year. While last year’s loss was generated by a large asset impairment write off and restructuring charges, even with these removed take out the underlying profit almost doubled compared to last year.
Moving on to the fourth quarter, revenues fell by more than 10 percent to $463.4 million, while order intake slipped by a more modest two percent to $472 million. Pre-tax profits however were $11.3 million compared to a loss of $75.1 million last year. Even with the asset write down striped down, profits were substantially higher.
The company is though forecasting further falls in revenue for 2020, with full year sales expected to come in between $1.6 and $1.7 billion indicating a decline in the region of 10 percent. While profits are expected to come in at similar levels to 2019.
Chief executive Barry Pennypacker said: “I am pleased to report another quarter of improving year over year adjusted EBITDA margin and strong cash generation as we reduced inventory from June 30, 2019 by approximately $91 million, exceeding our expectations. Our fourth quarter results contributed to what was an outstanding 2019 for Manitowoc. The four strategic priorities of The Manitowoc Way continue to generate results that prove our ability to deliver on our commitments.”
We will continue to provide our customers with the types of cranes they need to increase their return on invested capital. This will be evident with our new product introductions at the ConExpo trade show in March, where we will showcase six new cranes. While 2019 was a great year from a financial results perspective, our backlog declined 29 percent year over year primarily in the Americas region, setting up a more challenging year ahead. In spite of this, I am confident that through our ongoing lean transformation, Manitowoc has never been in a better position to navigate the market cycle, be it up or down.”
While sales growth for the full year was denied by a weaker fourth quarter, the company is certainly in better shape than it has been for some time, at least financially. The latest Grove and Potain products are attractive, with strong performance characteristics and are finding favour with a good many customers and end users. There is still more to be done on the distribution, and regeneration of brand position, but getting the financial position of the business right was a critical first step along the way to supporting those initiatives.
With Demag and Tadano becoming one, and the Terex Crane line fragmented and reduced, there should have been a major opportunity for Manitowoc to increase sales and market position in 2020, but it does not look as though that is on the cards now.
Much will depend on how good the new product launches are next month and when shipments are likely to commence, but also on how well the company is to deal with going forward, and how well it communicates. If Manitowoc can get those factors right it could do a good better than it is currently forecasting, even the market is likely to become tougher overall.
All in all the company should be happy with the financial progress made this year.