23.07.2009

Terex Cranes down 36%

Terex Cranes has reported first half revenues of $952 million, down 36 percent on the same period last year. Most of the decline has come from sales of tower cranes and Rough Terrain cranes, while big crawlers and All terrain sales have held up well.

Operating income at the half year mark was 45 million almost 80 percent lower than the $210 million reported in 2008.

In the second quarter the fall gained pace, with sales down 41 percent on the same quarter last year – although if currency factors are eliminated the fall was just 32 percent - At the same time profits dropped 84 percent to just $20 million. The crane order book at the end of June is 49 percent lower than it was in June 2008 and down 18 percent since the end of March.

Terex Group

Revenues for Terex as a whole were $2.6 billion, down 51 percent on 2008, while the net result before tax was a loss of $207 million, compared to a profit of $601 million in the first half of 2008.

Sales in the second quarter were down 55 percent to $1.32 billion while pre tax loss was $108 compare to a profit of $354 million last year.

Ron DeFeo, Terex chief executive said: “The turmoil from the ongoing recession continues to deeply impact sales for our industry, certain markets have stabilised, but at low levels, such as Aerial Work Platforms and Materials Processing. Other markets, such as Mining and large capacity cranes, have begun to weaken, but at less dramatic rates. We are responding by aggressively reducing costs.

Manufacturing spending in the second quarter of 2009 was down 49% from the second quarter of 2008 and 16% sequentially from the first quarter. When combined with further reductions of selling, general and administrative expenses, these actions resulted in a $246 million quarterly run-rate spending reduction in the second quarter of 2009 versus spending levels in the second quarter of 2008. We continue to target a $300 million quarterly run-rate reduction by year end. We are still managing the company for cash, and we made good progress this quarter.”

Vertikal Comment

This is not a bad result, all things considered, thanks the Demag investments in big crawler cranes and its All Terrain crane line up over the past five to 10 years.

The company should fare better than Manitowoc, given that Terex has a smaller share and is less dependent on the tower crane, Rough Terrain and boom truck markets, all of which are suffering badly at the moment.

Competition is hotting up though in both the big crawler crane market and the small to mid size All Terrain crane market, so Terex cannot afford to be complacent. At this stage it is hard to say which, if any of the big three is doing the best. Liebherr perhaps? thanks to its long term approach and private ownership.

Manitowoc is also doing surprisingly well thanks to its investments in some radical new products and continuing investment in its brands and new products. Terex Cranes is more vulnerable in terms of market position than the first half results suggest.