29.01.2010

JLG returns to profit

JLG has reported first fiscal quarter revenues of $728 million, up 97 percent on the same quarter in 2008, thanks to its work on Oshkosh M-ATV defense vehicles, which also helped it return to profitability.

Sales of JLG aerial lifts and telehandlers continued to decline, falling 60 percent to $200 million with telehandler sales suffering more than aerial lifts.

The main difference this year was the lack of a strong backlog going into the quarter, compared to the same period in 2008. At the end of December 2009 the backlog for Access Equipment was $102.8 million - 40.2 percent down on a year earlier.

JLG posted an operating income of $13.5 million for the quarter, compared to a loss of $47 million in the same period last year. While most of the profit came from the Oshkosh defense business, the company says that its traditional business also improved thanks to lower material costs, lower bad debts/restructuring charges and the benefit of cost reduction initiatives implemented in 2008/09.

JLG says that North American and European markets have stabilised while it has seen improvements in quoting activity and buying interest in Asia, Australia, South America, North Africa, and parts of the Middle East.

Inventory levels continue to decline to the point where the company has started recalling additional employees to produce models that are out of stock and in demand.

Oshkosh as a whole had a sparkling quarter, breaking records with revenues up almost 90 percent to $2.4 billion while pre-tax profits climbed from a loss of $14 million to a profit of $276 million.

Vertikal Comment

While these results are not all good news for JLG’s aerial lift and telehandler business, it is very good to see an overall improvement. The Oshkosh result on the other hand is incredible and comes from the amazing job the amazing way the company has reacted to the US army’s requirement for new bomb resistant vehicles.

While the JLG result is still showing a large fall in aerial lift and telehandler sales, this is likely to be the last of such reports as we move into the first quarter of 2009 for comparative purposes and the sings are the sales are picking up and production beginning to come back a little.

The challenge at JLG will be to follow or even lead what is likely to be a slow market recovery at a time when its main plants are busy with the Oshkosh truck orders. It will need to invest heaviest in what is currently the weaker part of its business – something that is counterintuitive.

The M-ATV business gives the company and the group a fantastic opportunity to get a head start in the lift market recovery, while the latest result should also shut up those who predicted the Oshkosh/JLG demise as it struggled with its debt burden last year.