21.02.2008

Genie climbs 12%

Terex Aerials which largely trades as Genie and comprises aerial lifts and telehandlers has reported its 2007 full year results with revenues up by almost 12 percent to $2.34 billion a new record.

Gross Profit increased by over 23 percent to $648 million or 27 percent of sales, up from 25 percent in 2006. Sales and General admin overheads increased by a percentage point to 8.3 percent of sales.

Income from operations which is essential profit before tax and interest was up by 21.5 percent to $453.1 million or 19.4 percent of sales almost two percent better than last year.

The trend improved in the fourth quarter in terms of sales and profits while the company managed to maintain its order book at the relatively high levels reached at the end of 2006 at $652 million – marginally up on where it was in September. The company says that North American demand for aerial lifts, flat for the past 12 months, showed signs of improvement in the fourth quarter.

Terex divisional presidents no longer contribute statements to the groups results bulletin A brief statement referring largely to the fourth quarter said: “Strong international demand continues to drive higher sales volume. Demand for scissor and boom lifts has increased in North America over the past few months and
parts sales are higher due to the greater installed base of machines. Operating margin in the fourth quarter of 2007 was flat compared to the fourth quarter of 2006 as increased sales volume was offset by the costs associated with the expansion of the global sales and distribution infrastructure.”

Terex Group Results

Group revenues increased by 19.5 percent to $9.14 billion while pre-tax profits leapt by almost 50 percent to $919.3 million.

Terex chairman and chief executive officer, Ron Defeo said: “For Terex, 2007 was a very strong year in terms of financial performance, with our best sales quarter of the year coming in the fourth quarter. This was a transformational year for our Company, as it demonstrated that the changes made as part of the journey we embarked on a few years back are taking hold and working.”
See Ron Defeo on CNBC
“We achieved a full year operating margin of 10.5 percent, net sales grew 19.5 percent and income from continuing operations was up 55 percent. These achievements place us well ahead of the pace we communicated a year earlier in conjunction with our medium term financial goals, and yet the operating margin improvement is still below the potential that we think exists in the Company.”

“We achieved these goals while continuing to have certain product lines of the Company face challenging market conditions in their particular niche. We have benefited from strong global markets, as well as a relatively small exposure to the U.S. housing market; in fact non-U.S. net sales represented 70 percent of our total net sales for the full year 2007.”

“We continue to build a better and stronger operating company while
keeping honed the skills of a targeted acquirer of assets. The supply chain and component shortages we are facing continue, but we are making steady progress.”

“In 2008, we will build start-up factories in India and China and potentially other developing markets. In 2007 we successfully acquired Superior Highwall
Miners, and expect to close the acquisition of A.S.V., Inc. in the near future.”

Vertikal Comment

No matter how you look at it these numbers, this is an impressive performance, increasing sales in the face of a slowing telehandler market in North America, while maintaining the backlog level at a time when availability of smaller Aerial lifts overall is easing up is encouraging.

Terex is making some significant changes in its business in order to are particularly noticeable in the AWP division boost its sales to the $12 billion level. Some of these changes have resulted in the company becoming more ‘structured’ and less personalised than it was, this is particularly true at Genie, where the original owners managed to maintain a small company feel in spite of rapid year on year growth.

With competition hotting up rapidly, time will tell if Terex has the right approach, if it can maintain its fourth quarter pace in the current market then the answer would seem to be Yes.