27.10.2003

Sales up 50 per cent at Terex

Terex Corporation in the US has announced a 50 per cent jump in revenues for the nine months to 30 September, 2003. This equates to US$2.8 billion (UK£1.6 billion), compared with a figure of $1.8 billion ((£1.08 billion) reported in the corresponding period of 2002. Terex said that this is largely due to its prior acquisitions of Demag and Genie.

Sales for the nine months on a like-for-like basis, stripping out the acquisitions, were up 3 per cent, both for the quarter and year to date.

Net income/profit for the nine months showed a reduction from a net loss of $92 million (£54 million) reported 2002, to a net loss of $22 million (£13 million) for 2003, a 76 per cent improvement.

Net sales for the third quarter of 2003 were $872.3 million (£514 million), an increase of 35 per cent, from $644.0 million (£379 million) reported for the same period of 2002.

Net income/profit for the quarter was $14.5 million (£8.5 million), compared to $9.8 million (£5.8 million) for 2002, an improvement of almost 50 per cent.

Cash flow from operations was $216 million (£127 million) and net debt decreased by $156 million (£92 million) for the nine months to 30 September, 2003.

The order backlog at the end of the period was $382million (£225 million), compared to $378 million (£223 million) reported 12 months earlier.

*Terex Cranes saw its sales for the nine months increase by over 66 per cent to $737 million (£434 million), from $443 million (£261 million) 12 months earlier. This was mainly due to the full year effect of the Demag acquisition.

Like-for-like Terex Crane sales were down 9 per cent due to a weak North American market, which was partially offset by a strong performance in Italy.

Gross profit for cranes rose by 39 per cent to $85 million (£50 million), while SG&A doubled, most likely reflecting the different approach of the Demag crane business to that of Terex.

As a result of the lower gross margin percentage and higher SG&A, the Group's operating income fell by over 20 per cent to
$25 million (£14.7 million) for the nine months. The Group’s order backlog was also lower at $125.6 million (£74 million), compared to $186.4 million (£110 million) reported 12 months earlier.

*Sales of Terex Aerial Work Platforms for the nine months, now represented almost entirely by Genie, were $451.3 million (£265.8 million) compared to only $47.6 million ($47.6 million) in 2002.

Gross profit was $96.7 million (£57 million),which equates to over 21 per cent of revenues. SG&A was $42.2 million (£24.9 million), or 9.4 per cent, giving an operating income for the nine months of $54.5 million (£32 million), a healthy 12 per cent. The reported order backlog was only $16.6 million (£9.8 million).

We are pleased with our execution so far this year,” said Ron Defeo, chairman and CEO at Terex. “We began the year with a lot of uncertainty. We recognized that an end market recovery was unlikely, but at the same time we believed that Terex was in a good position to change and improve, we have made progress and our internal focus has been paying dividends, as we have generated over $278 million in cash from operations over the last 12 months.

“Our integration of Demag and Genie has met or exceeded our expectations,” continued Defeo. “From an operational perspective, Demag has transformed Terex Cranes into a truly global company, solidifying our manufacturing footprint in Europe and providing the international diversification that has allowed us to withstand the depressed market conditions that we are facing in North America. From a financial perspective, Demag has generated significant free cash flow during its first year of Terex ownership.

“Genie has posted exceptional financial results in a difficult market through its first year of Terex ownership and provided many intangible benefits along the way. Genie’s lean manufacturing and continuous improvement has provided some best practices that are being shared within the company today. In addition, we are leveraging the strength of the Genie sales and customer service team to cross sell other Terex products, primarily our compact equipment line. This has clearly been an acquisition where both parties have learned from each other and where we are leveraging each other’s strengths to create a stronger overall company.”