Slow quarter for Genie
Terex has released its full year results which include a much slower fourth quarter for Genie.
The Terex group as a whole reported full year revenues almost four percent lower at $4.35 billion, while pre-tax profits came in 13.5 percent lower at $247.5 million.
Genie/Terex Utilities sales for the full 12 months were $2.73 billion, down 7.5 percent on 2018, principally due to the slower fourth quarter, while operating profits were 36 percent lower at $196.2 million. The backlog/order book at the end of December was $753 million, 13 percent down on the same point last year.
The Terex Cranes business is currently reported within Other Revenues, which were almost five percent higher for the full year at $255.1 million, while the operating loss on this part of the business was reduced from $64 million to $58 million.
Moving on to the fourth quarter Genie sales plummeted 20.8 percent to $500.1 million, partly due to uncertainty in the market and delays in order confirmations by many large rental companies. Operating profits were $4.4 million, a fall of 88 percent on the same quarter in 2018, much of which would have been related to the lower volumes. Order intake however was a good deal healthier at $755 million.
Genie president Matt Fearon, said: “The fourth quarter completed a year where we faced considerable market uncertainty after two years of robust demand. We are positioned well for 2020 and excited about our innovative new products, as well as our long term growth prospects. Particularly, we are expanding our Changzhou, China, facility in 2020 to accommodate the market growth in China for aerial products.”
“The Terex Utilities team continues to execute well and will transition to their new state of the art manufacturing and engineering facility this summer. This new facility will improve efficiency and increase capacity, which together with new products and service will enable Terex Utilities to continue to grow.”
Other Revenues in the fourth quarter - mostly cranes? - were almost seven percent higher at $63.5 million, while losses increased to $20.4 million from a loss of 5.9 million in the same period last year.
Terex chief executive John Garrison, said: "Our fourth quarter operating results were generally in line with our expectations on lower revenue and reflect continued challenging global market conditions for industrial equipment.”
“In 2019, we focused on safety, strengthening our balance sheet and investing in our products, manufacturing capability and parts and services. Despite the current industrial equipment market challenges, the longer term outlook for our businesses remains healthy and points to a promising future for Terex. We are encouraged by the adoption of our equipment in emerging markets and are well positioned to continue to deliver differentiated solutions to our customers.”
“We expect customers to remain cautious with their capital expenditure decisions in 2020. We expect full year EPS to be between $1.85 to $2.35 on net sales of approximately $3.9 billion. In addition, we expect full year free cash flow to be approximately $140 million.”
“We remain committed to investing in the development of innovative products and solutions for our customers, while continuously improving our operational performance."
Genie is not alone in having experienced a tough fourth quarter, and like others it seems things began to look a little brighter towards the end of the year, and have certainly picked up a little since then. It also needs to be said that the comparison is with a strong fourth quarter in 2018.
There are potential clouds on the horizon though, such as the possible economic impact of the Corona virus, which could cause serious manufacturing issues during the second quarter. Having said that the underlying market potential for aerial lifts remains very positive, as their market penetration continues to gather steam on a global basis.
What will be interesting in the short term is to see how the first quarter results from Genie - and others - look. Don't be surprised to see an pick up compared to the fourth quarter, as the order placement delays begin to turn into shipments.