04.02.2004

Manitowoc reports increased crane revenues

The Manitowoc Company Inc, announced its 2003 fourth quarter and full year results after close of business today Wednesday February 4th. The overall result was roughly as predicted with total company sales 3 percent up on fourth quarter 2002 and sales for the full year up 17% to $1.6 billion, compared to 1.4 billion in 2002. Much of the increase reflects the full year impact of acquisitions in the crane sector; revenues without the Grove Acquisition would have been down 11 percent.

The main highlight of the results was the $151 million of cash generated, well above the $100 million target. This allowed for a $126 million reduction to the company’s debt. Net earnings were a loss of $5.5 million, for the quarter after special items, compared with a net loss of $25.1 million in the same period in 2002.

Full year net earnings are $3.5 million compared to a loss of $20.5 million in 2002.

"Thanks to the strength of our diversified business model, we leveraged the strong performance from our Foodservice segment to help offset lower sales and earnings in some of our other businesses," said Terry D. Growcock, Manitowoc's chairman and chief executive officer. "In addition, an unyielding focus on cash generation in all three of our segments enabled us to generate $151 million in cash from operations and reduce our net debt by $126 million ($109 million reduction of debt and $17 million increase in cash) before the effect of currency translation. Both of these measures were substantially ahead of our targets of $100 million and $60 million, respectively."

Focusing on the Crane sector, sales for the fourth quarter were up 16% on the same period last year at $255 million, sales of US built Crawler cranes, Manitowoc’s traditional products, were still cited as being slow, particularly in North America. Crane revenues for the full year were up 44 percent at $1,023 million with over 70% coming from international markets. Asia and certain parts of Europe are quoted as the strongest performers. The company also claims to have improved its international crane sales and market penetration during the period, citing increased market shares in North America and Europe.

Manitowoc said that they have completed the integration of the internal Crane operations, which has generated more than $30 million in actual “synergy” cost savings in 2003 it is claimed that this will relate to $36 million for the full year, 2004.

The closure of the Liftlux plant and boom lift production in Shady Grove resulted in an $8 million write of in the fourth quarter for “losses on sale or closure of discontinued operations”. It is now understood that most of the employees at the German Liftlux plant have now departed, but several interested parties are looking at the possible purchase of the discontinued Aerial work Platform assets, no mention of this has been made by the company. Annualised cost savings impact to the bottom line of the AWP closures is quoted as $4 million, this being over and above the previoiusly mentioned $36 million.

“While we expect weak demand for U.S. crawler cranes to continue well into 2004, we are beginning to see other signs of an upturn in the economy,” "Although the landscape remains very competitive, international demand for crawler, tower, and mobile telescopic cranes is improving” said Growcock.

In their conference call on Thursday, the Management said that they expect to see revenues conservatively grow by seven to eight percent in 2004, in a market expected to be “flat to slightly up”. When discussing pricing levels they saw a three percent erosion in the second half of 2003, this is expected to stabelise in 2004, with optimism of some firming in certain markets.

The cash generation target for 2004 will remain the same as the original 2003 target at $100 million.

On the Crane product development the company stressed several times that it is planning to launch 16 new Crane products in 2004, up from 15 new products in 2003. A key new model highlighted during the call was the Grove GMK 3055 three axle 55 tonne All Terrain crane.