01.05.2009

Manitowoc crane dips 24%

Manitowoc crane has posted first quarter revenues of $673 million 24% lower than last year while operating income dropped 58% to $56.5 million. Revenues would have been better but were negatively impacted by an eight percent negative currency factor.

The company’s crane backlog totalled $1.4 billion at the end of March, 28 percent lower than at the end of December. Manitowoc says that while its order book has declined for a third consecutive quarter, the net-negative order-flow/ order cancellations has now stabilised with the net order intake going positive again on a more consistent basis.

The group as a whole saw revenues climb four percent to just over a $billion, thanks to the Enodis acquisition. Although comparing total group revenue with the combined revenues of both companies in 2008 shows a 22 percent reduction.

Pre tax profits took a hammering though with a loss of $699 million compared to a profit of $103 million last year. The major reason for this massive loss was a $700 million non – cash goodwill write down on the Enodis acquisition.

Glen Tellock, Manitowoc's chief executive said: "These charges were driven by the current economic environment and compliance with the appropriate accounting standards. We remain confident in the long-term growth and profitability opportunities for both of our market-leading businesses."

Speaking of the results as a whole he added: "This quarter contrasts sharply with the first quarter of 2008 when we were near the peak of the business cycle in our Crane segment. We experienced a dramatic reversal in demand for cranes over the past several quarters driven primarily by constrained credit availability. As a result, customers have cancelled or delayed deliveries across many of our end markets and product lines. Fortunately, we have experienced a less severe decline in the Foodservice segment.”

"We have acted quickly and aggressively to maximize opportunities to improve our operations and adjust our cost structure in ways that will improve our competitive strength. We are focused on initiatives that will improve profitability for the long term and allow us to emerge from the worldwide recession in a stronger competitive position. On an annual run-rate we have lowered our cost structure by over $260 million."

Vertikal Comment

While on the surface these are negative numbers this is not a bad result from Manitowoc, which has outperformed its main rival - Terex. This in spite of the fact that Manitowoc is more exposed than Terex cranes to the current slowdown, given the fact that it has a stronger position in the tower crane, rough terrain and boom truck markets, all of which have been the a hardest hit by order cancellations.

The company has however been quick to cut costs and reduce immediate capacity and yet it has been very active with new product introductions, some of which are highly unusual – possibly innovative- certainly different. It also continues to promote itself aggressively, its stand at Intermat last week was very busy for most of the show while some of its major competitors were nowhere to be seen.

If the company can maintain its current strategies it should come out of this recession in a stronger market position than when it went in.