01.05.2009

JLG drops 69%

Aerial lift and telehandler manufacturer JLG has reported its half year results which show revenues down 58 percent to $618 million, although the second quarter to the end of March was worse, with revenues down 69.4 percent to $249.2 million.

The company also took a massive goodwill write down which resulted in a colossal operating loss of $942 million for the quarter and $988.7 million for the half year. Excluding the impairment charges, the operating loss for the quarter was $49.1 million, compared to an operating income of $123.6 million last year.

The company’s order book was barely 10 percent of what it was at the same point last year, at just $98.5 million, reflecting the fact that most orders are shipped directly from stock.

The company says that sales reflected substantially lower global demand arising from tight credit markets. European, African and Middle Eastern equipment sales declined around 80 percent while equipment sales elsewhere, including North America, were down about 70 percent compared to the same point last year.

Robert Bohn, chief executive of JLG’s parent, Oshkosh, said: “Our defence, Pierce fire apparatus and airport products businesses all delivered double-digit revenue increases and higher operating income in the second quarter. These gains and significant additional cost reduction actions implemented in the quarter were not enough to overcome sharply lower demand at a number of our other businesses, particularly those serving construction-related markets, like our access equipment and concrete placement businesses. As a result, we posted a net loss of 24 cents per share, excluding the impact of the non-cash impairment charges that were recorded in the quarter.”

“While the global recession has had a significant impact on several of our businesses, we have been working diligently to manage through this challenging environment. During the quarter we implemented additional cost reductions to increase our expected fiscal 2009 savings from $150 million to more than $200 million. Even with these aggressive actions, the effects of the global recession and credit crisis lead us to believe Oshkosh will record a net loss for the full fiscal year, excluding the impact of the impairment charges recorded in the second fiscal quarter. We remain committed to continue doing what is necessary to further reduce our cost structure, drive operational improvements and increase cash generation to manage the business through this period of economic weakness.”

Vertikal Comment

This result is not dissimilar to that experienced by the other two major full line manufacturers - Genie was down 65 percent and Haulotte 61 percent and JLG remains the largest of the three in terms of revenues.

What no one can be certain of is if this is the bottom of the market or even if it has bottomed out yet. Until rental companies regain their confidence and start to see utilisation rise we are not likely to see a significant pick up. With production now cut back to a fraction of last years levels, even a modest pick up could quickly lead to product shortages.

At the risk of putting our head on the block, we predict that the next two quarters through to the end of September will be similar to the first quarter with the fourth quarter beginning to pick up leaving 2009 as a disastrous you against which 2010 will look quite rosy.