24.04.2008

Strong first quarter for Terex Crane

First quarter revenues at Terex Cranes jumped by 26.2 percent compared to the same period in 2007, to $632.2 million. The increase came from a 15.4 percent rise in sales, with the balance coming from a currency exchange gain from the weak dollar compared to the euro.

Strong global demand for large crawler cranes and mobile telescopics, continued to drive the company’s upturn in sales and order activity. A pick up in Rough Terrain crane sales in the quarter also reflected North American and Middle East market strength, particularly from the energy sector. This was offset a little by weaker sales of boom trucks and smaller truck cranes in North America.

Operating income was 85.8 million an increase of 62 percent on the same period in 2007. As a percentage of sales margins were 13.6 percent compared to 10.6 percent in 2007, reflecting the favorable mix of high capacity cranes in the quarter, as well as meaningful improvement in lean manufacturing and productivity enhancements.

Supplier constraints, particularly in Europe, and capacity limitations in terms of welding and assembly space have extended delivery lead times still further, the crane groups order book rose by 9.2 percent compared to the start of the quarter and is up 70 percent year on year.

The order book is however understated by up to $210 million, in that the company says that it is not including any orders for Rough Terrain cranes due for delivery after the end of 2008 in its backlog.

"This is designed to ensure that prices for 2009 delivery sufficiently reflect the demand environment and potential input cost increases of the business. Production volumes for which firm orders have not yet been accepted for the first quarter of 2009 have not been included in backlog."

The Terex Group as a whole saw sales grow by almost 17.5 percent to $2.363 billion, while pre tax profits jumped by over 35 percent to $246.5 million.

Vertikal Comment

Terex crane sales continue to do well but the company is almost certainly loosing market share due to its capacity constraints. The strong sales growth in the quarter suggests that the company is making some progress to this end although the upturn in the USA probably contributed to this more than anything.

The increase in margins reflects the strong state of the crane market which looks solid for the foreseeable future. The big challenge for Terex will be to extract more capacity from its German and Italian crane facilities.