Higher sales, lower profits for JLG
JLG has reported first quarter revenues of $883.1 million up 19.6 percent on the same quarter last year, thanks to strong demand in North America.
The revenues were made up as follows:
New Aerial work platform sales
of $439.7 million an increase of almost 23 percent, while
jumped 31 percent to $229.7 million and Other sales
- mostly parts, services and used equipment sales - improved five percent to $213 .6 million.
Operating profit for the quarter plummeted to $7.5 million from $80.5 million last year, a 91 percent fall caused by higher material and logistics costs and higher manufacturing costs, associated with 'the implementation of new manufacturing initiatives', partly offset by higher sales volumes and higher prices.
The JLG order book/backlog at the end of the quarter reached a record $3.96 billion up from $1.5 billion a year ago.
Parent company Oshkosh
saw revenues increase just three percent above last year’s levels, while pre-tax profit dropped to $18.8 million, from last year’s $ 132.7 million.
Oshkosh chief executive John Pfeifer said: “I am proud of the efforts of Oshkosh team members who worked hard and demonstrated great resolve to overcome very challenging conditions in our first quarter. Commodity prices showed steady improvement in the first half of the quarter, but significantly reversed course following the Russian invasion of Ukraine as steel and aluminium costs as well as freight costs increased rapidly. Additionally, we continued to experience supply chain disruptions and elevated workforce turnover that remain macro issues affecting many industries. Despite these headwinds, in response to the further cost inflation we are facing, we implemented additional surcharges in our Access Equipment and Commercial segments as well as pricing actions in the Fire & Emergency segment. Looking ahead, we are encouraged by the extremely strong demand and high order rates across our business segments, as evidenced by an all-time record backlog of over $12 billion at quarter end.
This is a very mixed result from JLG. The sales increase is very positive although it sounds like most of the growth came from its domestic market rather than being more wide spread. The drop in profitability is understandable and not that different from what we can expect from other manufacturers. However, the company appears to be facing a self-inflicted jump in costs for the small scissor lift it imports from China, following the success of its request to the US government to impose tariffs on Chinese aerial lift imports, which applies to the units it brings in. It is likely to have faced a tariffs of more than 50 percent since the start of March. One anticipates that production will be - or has - switched to North America but given existing capacity constraints and set-up costs there will be a price to bear, which may well be reflected in what it refers to as the 'implementation of new manufacturing initiatives'.
The cost increases associated with this move as well as all the other componentry and logistic costs that manufacturers are having to face, will certainly have a larger price impact on smaller aerial lifts, which may well assist other manufacturers with production facilities in North America, Europe or elsewhere.
That said, going into the second quarter with such a healthy order book will provide an excellent spring board to a solid result for the full year.