02.08.2016

Terex Cranes dips 15%

Terex Cranes has reported a 15 percent drop in first half revenues along with an operating loss.

Total revenues for the six months were $665 million almost 15 percent lower than for the same period last year, the lower revenues helped push the business into a loss of $29.4 million, compared to an operating profit this time last year of $23.7 million.

In the second quarter revenues were over 16 percent lower at $357.4 million, with an operating loss of $12.8 million, compared to a profit last year of $21.3 million. The order book/backlog at the end of the period was $355 around 31 percent lower than at this point last year.

Terex as a whole reported half year revenues of $2.41 billion, six percent lower than last year – for the ongoing businesses. On the same basis, pre-tax profits were over 78 percent lower at $24.4 million.

Chief executive John Garrison said: “Our second quarter results reflect a company in transition. With the pending sale of our Material Handling & Port Solutions business and parts of our Construction portfolio, we made several structural changes in the quarter. Going forward, we will be a more focused company, centred around three segments: Aerial Work Platforms , Cranes, and Materials Processing.”

“We continued to face challenging markets in the second quarter. The North American market for many of our aerial work platform and Crane products was lower than last year, as expected, which was reflected in both our sales and orders in the quarter. We grew aerial lift sales in Europe and parts of Asia, but not enough to offset the softness in North America.”

“We remain focused on what we can control. The steps we took earlier in the year to reduce SG&A helped offset some of the impact of soft markets and competitive pricing, but more is needed. In the second quarter, we took additional steps to simplify our manufacturing footprint and lower our cost base. After the sale of MHPS, Terex will be a smaller company. We are committed to reducing our cost structure accordingly”.

“On a comparable basis, we believe our earnings per share and net sales for the full year 2016 will be consistent with our previous guidance. As a result of accounting for MHPS as discontinued operations, we now expect earnings per share from continuing operations to be between $0.85 and $1.15, excluding restructuring and other unusual items, on net sales of $4.3 billion to $4.5 billion. This reflects the removal of MHPS earnings from continuing operations and the impact of unabsorbed corporate management costs, but does not reflect any of the benefits of the sale of MHPS which will be realised upon completion of the sale.”

Vertikal Comment

Clearly this is not a good result for Terex Cranes, and it is unlikely to get better anytime soon, as it goes through the Waverly plant closure and restarting production in Oklahoma.

The Demag initiative in Germany will certainly have a positive impact, but that it unlikely to yield immediate results. What it might do is re-motivate a talented team and encourage a fresh look at a number of issues, which will also encourage customers. The plants in France and Italy though, may well feel a little left out, given that they too may feel that they had illustrious former brand names, which some would like to get back to?

One should not underestimate the strength of the Terex Cranes business though, it has some excellent products and a real opportunity to regain its former glory. The branding switch is the beginning, rather than the end.