03.11.2009

JLG down 58%

JLG has reported fourth quarter revenues down 58 percent on the same period last year, while the full year ended 63 percent lower.

The worlds largest aerial lift manufacturer posted fourth quarter revenues of $310.5 million, with an operating loss of $45.8 million compared to a profit of $50.2 million last year.

Fourth quarter revenues at JLG were boosted by shipments of $87 million of Oshkosh’s M-ATV All Terrain military truck to the group’s defence division.

Sales of telehandlers and aerial lifts were down around 80 percent compared to the same quarter in 2008.

Full year revenues were $1.14 billion 63 percent lower than last years $3.01 billion. Backlog at year end was just $98 million, compared to $330 million in 2008. The business posted an operating loss of $1.1 billion, compared to an operating profit of $360 million last year. Most of this was due to a massive write down in goodwill value.

Oshkosh as whole fared better, with full year revenues of $5.3 billion compared to $6.9 billion last year, a drop of 24 percent compared to 2008. Most positive of all is its order book which has more than doubled, jumping from $2.3 billion to $5.6 billion. Largely due to the 4,000 unit order for the M-ATV truck.

The group reported a $1.92 billion pre tax loss, much due to goodwill impairment. At the same time it has had positive cash generation which has helped it pay down net debt to the tune of $736 million.

Vertikal Comment

JLG has suffered from the slow down at similar levels to its main competitors, however it is now being helped by building sections of the Oshkosh M-ATV truck, as a sub contractor to Oshkosh’s defence division.

This has taken telehandler and lift capacity off the market and allowed JLG to re-hire a good number of its production staff well before its main competitors can consider such moves.

The massive operating loss at JLG is largely a non-cash write down and a result of the fact that Oshkosh bought at the top of the market. This latest military order is allowing the group to pay down the debt it took on to acquire JLG and it expects to have a solidly profitable year in 2010, regardless of the access market.

The intercompany sales activity will help carry JLG though the recession in better shape than some. Allowing Oshkosh to begin to see the benefits of its expensive purchase from 2011 onwards, when the defence market may not be quite as strong as it is today.

When Oshkosh acquired JLG in 2006, it did state that it was buying it as a long term investment and diversification/offset to the military business. That strategy may yet work out closer to that stated plan than it might have hoped.