09.08.2016

Tough quarter at Manitowoc

US based crane manufacturer Manitowoc has reported its first half results with another tough quarter.

Total revenues for the first half were fractionally higher than last year at $885.1 million, while last year’s pre-tax loss of $41 million increased to $86.2 million, due to $13.2 million of restructuring costs, plus a $73 million loss on the early retirement of debt, partially offset by lower interest costs as a result.

In the second quarter revenues were just over four percent lower at $457.7 million, while last year’s pre-tax loss of $8 million was cut to a loss of $3.4 million, thanks to lower interest costs but higher restructuring expense. The backlog/order book at the end of June was $394 million down from $502 million at the end of the first quarter. The company now expects revenues for the full year to come in around 10 to 12 percent below 2015.

Chief executive Barry Pennypacker said: “During the second quarter, our sales were further impacted by a challenging market environment on a number of levels, particularly in mobile cranes in the Americas. This weakness was in part offset by strength in tower cranes. While the market conditions are beyond our control, we continue to execute our strategic initiatives by focusing on quality and reliability in all of our products, velocity and innovation, and aligning our cost structure to meet current and future demand levels. Our efforts are paying off. By focusing on items within our control, we tripled our adjusted operating income on flat sales during the first half of the year, underscoring the success of our efforts to drive lean operating principles using The Manitowoc Way.”

“As we approach the back half of the year, we expect to see market challenges continue and a similar dynamic in sales with continued strength in tower cranes more than offset by continued weakness in mobile cranes. In spite of the positive energy we experienced at bauma this year, it is clear that our customers remain cautious around spending given the ongoing global macro-economic uncertainty. As a result, we have lowered our full-year 2016 sales and operating margin guidance. We are confident, however, that the actions we are taking now to position Manitowoc over the long term will allow us to exit this cycle stronger and poised to deliver significant profit growth and shareholder value creation.”

Vertikal Comment

While this is clearly a negative set of numbers, the company is performing better than might have been expected, given its position in the North American and Oil & Gas markets. Sales of tower crane and All Terrains are though helping offset some of this slow down. It is also getting to grips with some of its overhead costs, including the merging of the Manitowoc and Grove plants in North America.

Order intake in the second quarter was low leaving a backlog frighteningly low, given the wide product range. However we expect the company to stabilise at this level for a while, while working at margin improvement, and faster reaction times to changing market conditions.