27.04.2016

Terex Cranes slips back

Terex Cranes has reported a fall in revenues, along with a steep fall in profits for the first quarter

Total revenues for the period were $307.3 million, down 13 percent on the same period last year, operating income was substantially down on last year with a loss of $16.6 million, compared to a profit in 2015 of $2.4 million.

The Terex group as a whole saw revenues decline around four percent to $1.43
billion, while last year’s pre-tax profit of $10.1 million was converted to a pre-tax loss this year of $61.8 million. A good chunk of this was due to severance and restructuring costs, as well as $8.9 million related to ongoing merger and acquisition activities.

Chief executive John Garrison said: “Our first quarter results were in-line with our expectations. The Material Handling & Port Solutions segment had a challenging quarter, impacted by soft markets. Our Aerial Work Platforms Materials Processing (MP) and Construction segments executed well and delivered results that were consistent with or better than last year, on an adjusted basis.”

Our customers remain cautious in the current global environment. Overall the markets are challenging, but there are pockets of opportunity. Most of our AWP North American rental customers are cautious about their capital requirements, managing time utilisation of their fleet and rental rates. The impact from the oil and gas and resource sector declines continue to constrain global demand for many of our products, Cranes in particular. We remain focused on what we can control and have initiated a broad-based restructuring program in the quarter to reduce our SG&A costs and align production capacity with demand. We maintain our full year guidance and net sales to be about 10 percent lower than 2015.”

Vertikal Comment

Things are not looking great for Terex Cranes, at least in terms of results, but it would be highly premature to read too much into the latest numbers. The company produces a wide product range with some stand out products, and is clearly addressing some, of the issues which have not helped it over the past couple of years or so.

This part of the Terex business is clearly more affected than the rest by the possible association with Zoomlion, which is almost certainly not helping at a time when the crane market has more than enough of its own challenges.

The rebranding of its German cranes back to Demag will help, in that it is already looking like a real morale boosting factor for those employees building All Terrain and big lattice cranes, as well as some of the sales staff and distributors. But it is not going to be a quick fix of course. So uncertainty will continue until the group’s future ownership is finally resolved and the changes start to yield tangible results. Such uncertainty has a far bigger impact on high ticket equipment, such as cranes, than it does on aerial lifts and smaller products.

It looks like 2016 could be a turbulent, but possibly transformational year for Terex Cranes.