28.04.2016

Tough quarter for JLG

JLG has reported its half year results to the end of March, which show a further decline in sales and profits.

Total revenue for the six months was $1.28 billion, a decline of more than 24 percent, while sales of both aerial lifts and telehandlers declined, most of the drop was due to telehandler sales coming in at $326.5 million, less than half the level for the same period last year, when demand surged due to the impending transition to Tier 4 engines. Aerial lift sales were down 13 percent to $617.1 million, while other revenues, including parts and service etc…. improved almost seven percent to $340.5 million. Operating profit for the half year was $96.1 million, compared to $214.1 million this time last year.

Looking at the quarter - January through March - revenues were down 23.2 percent to $754.3 million, with aerial lift sales dropped almost 14 percent to $375.1 million, while telehandlers at $214.7 million were almost 44 percent lower than last year. Other revenues also declined slightly, dropping three percent to $164.5 million. Operating profit was 45 percent lower at $75.7 million.

The backlog at the end of March was $664.8 million, almost two percent higher than a year ago. JLG is owned by Oshkosh which reported a fall in revenues of almost five percent to $2.78 billion, while pre-tax profits came in just over 31 percent lower at $91.5 million.

Oshkosh chief executive Wilson Jones said: “Our North American access equipment rental customers, as expected, adopted a more cautious approach to rental fleet capital expenditures during the quarter. However, we believe rental company market conditions continue to support a reasonable level of fleet investment. We believe a generally more positive view on the U.S. economy, a solid construction outlook and a relatively mild winter in the U.S. led some rental companies to make access equipment purchase decisions earlier in the year than they may have previously planned, leading to higher than expected sales in the access equipment segment in the second quarter."

Vertikal Comment

This is a slightly worse result than we were expecting but apparently well within the company's and the market’s expectations. The telehandler surge last year was always going to make the start of this year look grim, and that will eventually drop out. When it comes to aerial lift sales JLG has probably been hit more than some others by companies like United deciding to postpone investments in order to bring down lead times and flex its fleet. Sunbelt has also reached a point where it has rejuvenated its aerial lift fleet and can take a break on new purchases for a quarter or two.

The company also needed to spice up its product range a little and is now begining to do that, the new 150ft articulated boom - the 1500AJP - should be a real winner and its launch timed nicely - initially to supply new demand, but then to replace the large number of ageing Genie Z135/70s where owners may be inclined to upgrade to a slightly larger machine?

The introduction of new models to replace the RS slab scissor lift line, that has not found the success that the company had hoped for it, will also provide a boost… eventually. Much of this upside will kick in the next financial year which begins in October, until then the second half could remain bumpy for JLG, although it is likely to steadily improve on the first half.

JLG is quietly doing a lot of good things at the moment, which have a longer term payback so it would be wrong to read too much into these numbers.