24.07.2008

Genie up 6%

First half revenues at Terex AWP - largely Genie aerial lifts and telehandlers, increased by six percent on the same period in 2007, to $1.26 billion, while the company’s order book was down by over 47 percent in the same period and 40 percent lower than it was at the end of March.

Excluding exchange rate gains sales increased by around one percent. The company said that sales in Western Europe did not achieve its growth expectations while performance in the USA was as expected. Sales of Genie products in developing markets, including the Middle East, Russia, Eastern Europe and Brazil, continued to grow.


Gross margins improved by a percentage point to 22 percent while income from operations was down by over five percent to $232 million. According to Terex, the drop in profits is primarily due to sales mix, rising input costs and increased costs associated with the expansion of its global sales and distribution infrastructure.

It also said that production is being adjusted to reflect lower anticipated demand in the second half of 2008 in the U.S. and Western Europe.

Terex group sales increased by over 23 percent to $5.3 billion while its overall backlog is up 11.2 percent on this time last years and up by over 12 percent since the end of March.

Pre tax profits jumped by almost 33 percent to just under $600 million.

Ron DeFeo, Terex chairman and chief executive officer said: “Results this quarter demonstrate the continued strength of our global franchise. The infrastructure and commodity boom is driving strong demand for our cranes and mining equipment.”

“Based on our increasing backlog for these products, we expect these positive trends to continue. Also, as expected, this was partially offset by slower growth trends in the Aerial Work Platform segment and further softening in the Construction segment. Though both AWP and Construction experienced growth this past quarter, slower growth in Western Europe impacted their performance.”

“Not surprisingly, input costs continue to present challenges for us. To offset this, we are implementing various price increases and maintaining cost discipline. While in total we expect higher pricing will largely offset the cost increases that we have already incurred, as well as additional cost increases that we expect to incur during the second half of 2008, we do expect that there will be a lag between when higher costs are incurred and price increases to our customers take effect. Accordingly, we anticipate some reduction in operating margin in our business during the remainder of 2008.”

“We expect our performance for 2008 to be within our previously announced range for earnings with net sales of $10.5 to $10.9 billion. We expect strong infrastructure and commodity demand for our Cranes and MPM segments to continue, which will drive a higher portion of our net sales and income for the balance of 2008.”

Vertikal Comment

These relatively upbeat results for the Genie business will be a pleasant surprise to many, given the sharp fall in the US telehandler market, and the loss of some business in Europe. Many expected the company to announce a fall in sales rather than a modest increase.

The shortfall in Europe was as much down to an optimistic forecast as anything else and was compounded by some large cancellations from the Lavendon group following its acquisitions of DK Rental and The Platform Company.