31.07.2020

Tough half for Manitou

French telehandler and aerial lift manufacturer Manitou has reported a sharp fall in revenues and profitability for the first six months of the year.

Total revenues were €761.6 million, down 35 percent on the same point last year, with net income of €13.5 million, almost 78 percent below last year’s result. The company did though manage to reduce net debt from €201.4 million to €178.8 million, a reduction of more than 11 percent.

Looking at the three divisions, the Material Handling and Access division posted half year revenues of €496 million, a fall of 40 percent on the year, with an operating profit of €19.7 million, down 70 percent on last year.

The Compact Equipment division - largely Gehl - saw revenues decline 31 percent to €123 million, but last year’s slim operating profit of €3.9 million turned into a loss of €9.7 million this year. As a result the company has reduced its headcount by 100 employees at plants in the USA and India.

Meanwhile the services business saw revenues for the half year slip nine percent to €141.9 million, however the operating profit improved 18 percent to €16.9 million thanks to cost savings and efficiencies.

Total sales in the second quarter were 43 percent lower at €341 million, made up of Material Handling and Access sales of €213 million, a fall of 51 percent, Compact Equipment sales of €60 million, down 37 percent, while Services declined just nine percent to €68 million. The company also announced that with telehandler production for the developing markets having started in India, it will cease production at its plant in Brazil and the end of August.

New equipment order intake in the quarter declined 37 percent to €180 million, leaving the order book/backlog at €555 million, compared to €643 million at this point last year.

Chief executive Michel Denis said: "The first half of 2020 was highlighted by the sudden Covid-19 crisis that has been disrupting our markets since mid March, resulting in a 35 percent drop in our sales compared to a record first half of 2019.”
“As soon as the health crisis emerged, we reacted very quickly to implement health and operational measures to protect our employees and continue to meet the urgent needs of our customers. A crisis management steering committee was immediately activated to define the direction and priority actions to be implemented. We established constant communication with our teams, stakeholders and board of directors. The agility and reactivity of our employees enabled us to maintain support to our customers and users throughout the period, particularly in terms of spare parts and technical assistance.”

“On the industrial side, we were able, from mid April, to gradually restart the French and Italian production lines by introducing strict health and safety procedures. Significant production re-planning work has been carried out with our customers and suppliers in order to be able to deliver the most urgent orders. This was particularly the case for those in the agricultural sector or in remote geographical areas whose seasonality required shipment before the summer shutdown.”

“All of these measures helped us to get through this very difficult period in the best possible way and we have now returned to a market order adjusted to the current volumes of activity in our markets.”

“On the financial level, we have deployed measures from the beginning of the crisis to reduce all of our expenses and investments, implemented measures to reduce working hours and certain government aid in order to protect the group's cash flow and sustainability as much as possible. These measures were reinforced by the Board of Directors' decision not to proceed with the payment of the €30 million dividend that had been announced a few weeks before the health crisis erupted. The group ended the half year with a current operating profit of 3.9 percent of sales.”

“After suffering an air pocket from mid-March to mid-May, the recovery was encouraging in June. The agricultural market remains the most buoyant, while the industrial and construction sectors recorded more significant decreases, particularly among rental companies, whose business outlook for the remaining part of 2020 and 2021 is still gloomy.”

“On the strength of the upturn at the end of the quarter, the group ended the first half of the year with an order book of €555 million, which enables us to estimate a sales outlook for 2020 that is around 30 percent lower than in 2019 and, in the absence of any further deterioration in the global economic context, a current operating profit in the range of 2.7 to 3.2 percent. We also believe that the crisis we are going through, will have economic consequences beyond 2020 and that our current operating income target of more than eight percent of sales under the Ambition 2022 plan will not be achieved by the initial target date.”

Vertikal Comment

These are not great numbers of course, but nor were they likely to be. Manitou has done a little better than some in this sector, but this can be related to how strict the lockdowns in each region were, which is outside of anyone’s control. France was particularly tough, as was Italy.

The company remains profitably strong enough to come through the crisis in reasonable shape. It has the benefit of an ownership profile that will allow the management to focus on the longer term, which is always a major benefit at times like this.