29.01.2009

Manitowoc hits new record

Manitowoc crane sales in 2008 were up almost 22 percent to a new record of $3.9 billion, narrowly missing hitting $4 billion due to a fourth quarter that was marginally below the same period in 2007.

Operating income at the crane division was $556 million, an increase of 18 percent, once again dragged down by the fourth quarter which saw profits slip 19 percent. This driven by a falling order book which contracted by 35 percent from $2.9 to 1.9 billion.

The company has already said that softening demand for smaller cranes is likely to drag crane sales down my around 20 percent for the full year 2009. The fourth quarter results include a $14 million charge for restructuring costs in the crane business to reduce capacity and costs.

The group as a whole also hit new records thank to both cranes and a partial contribution form the Enodis food business. Revenues were up 22 percent to $4.5 billion. Profits before exceptional were up almost 20 percent, but a $379 loss on a currency hedge to cover the Enodis deal slashed pre tax profits to just $79 million 82 percent lower than last year.

Glen Tellock, Manitowoc president and chief executive said: "This has been a transformational year for Manitowoc. We are successfully executing our long-term strategy of building market-leadership positions in our two core markets: cranes and commercial foodservice equipment.”

“In addition, we have divested our Marine segment and are now focusing all resources and management efforts on expanding our competitive position within our two remaining segments.”

"Like most companies, we are feeling the impact of the global economic slowdown. We have taken appropriate actions and we will make additional changes to our businesses as market dynamics continue to unfold in 2009. We intend to build on our leadership positions during this slowdown and emerge as an even stronger competitor."

"As we stated in our January 8 announcement, we are experiencing a weakening demand in the Crane segment, and we estimate a decline in crane sales of approximately 20 percent in 2009. Although demand for lighter lift capacity cranes has softened globally, demand for higher capacity cranes in the U.S. and Asia remains relatively stable. However, demand in Europe and the Middle East has weakened considerably compared to the peak we experienced in the first half of 2008."


Vertikal Comment

As recently as September, Manitowoc was on target to smash through the $4 billion level for crane sales in 2008. However as the banking crisis took hold in October and November funding challenges began to hit the crane market, along with the slowdown in sales of boom trucks, small truck cranes and tower cranes.

While sales are likely to drop by 20 to 25 percent this year, Manitowoc and other crane manufacturers should be able to eke out an improved margin from falling steel and component prices offsetting some of the fall in volume. Manitowoc as a whole could also benefit from the recent Enodis deal, which gives its food business some real scale and takes it deeper into the fast food business, which according to many analysts will benefit from families scaling back their eating-out habits to less expensive fast food restaurants.

On the crane side the company could well use the recession to increase its lead – in terms of market share – over many of the crane companies below it, as it launches new products and steps up or maintains its sales and marketing efforts.

The company has already announced a number of new products for this years Intermat and with several competitors not now attending, it must be relishing the prospect of the event, as long of course, as it is well attended.

The slow down might also throw up some interesting acquisition opportunities, the company already has first class tower crane, Rough Terrain and boom truck lines, along with a reasonable and improving All Terrain crane range. When it comes to crawler cranes though, the line is still patchy, particularly at the smaller end, it has currently plugged this with its OEM deal with Kobelco although it is not worldwide.

It is entirely possible that over the next year or two one of the big Japanese crawler crane manufacturers … including Kobelco – or possibly a Chinese one might become available at an attractive price? The same might also be true of a good quality European articulated loader crane producer.

If Manitowoc can raise the funds for such acquisitions, it could well use the recession to slip past Liebherr into the market leader’s position? Although the big family owned German/Swiss company will itself be looking to use the recession to move ahead and should never ever be underestimated.

Interesting times!