31.10.2016

Genie slips in third quarter

Genie / Terex AWP has reported further falls in both revenues and profits for the third quarter, but remains on forecast with a more positive outlook.

Total revenues for the nine months are $1.599 billion, 11 percent down on the same period last year, while operating profits plummeted over 30 percent to $159.2 million, thanks to the lower revenues and restructuring costs.

Looking at the third quarter, revenues fell over 16 percent to $484.4 million, with operating profits dropping over 38 percent to $48.6 million. The backlog order book at the end of the quarter was 16 percent lower at $253 million.

The company is currently rationalising its operations reducing the number of production points and closing smaller facilities. The company anticipates ending the year 13 percent lower than in 2015, a slight improvement on its previous guidance.

The Terex group as a whole reported revenues for the nine months of $3.67 billion 10 percent down on this time last year. Pre-Tax profits fell over 77 percent to $38.3 million.

Terex chief executive John Garrison said: “Our Aerial Work Platforms and Materials Processing segments performed in line with expectations, while Cranes performance was negatively impacted by more challenging markets than we anticipated and operational factors. The global capital equipment market remains challenging. Aerial work platform equipment sales continued to soften globally, particularly in North America. The market for mobile cranes weakened further than planned in the third quarter, with the primary driver being the retrenchment in the oil and gas sector in North America and legislative changes to subsidies in the German wind energy industry. We are taking actions to improve the Cranes business including the recently announced leadership changes.”

“We are reviewing all aspects of our cost structure and have been taking actions throughout the entire company to reduce costs. These savings were critical to at least partially offsetting challenging conditions in our markets. We further tightened the focus of our portfolio with the sale of our German Compact Construction business, and are progressing toward the planned completion of the Material Handling and Port Services sale in early 2017. We are also moving forward with the evaluation and simplification of our manufacturing footprint. During 2016, we successfully moved our mobile crane production from Waverly, Iowa to Oklahoma City, Oklahoma. Our AWP segment is consolidating scissor manufacturing from three locations to two, and reducing its overall manufacturing footprint including its main campus in Redmond, Washington. It also closed its facility in Stockton, California, and recently announced plans to
close its Waco, Texas facility, consolidating into Oklahoma City.”

“Given the market dynamics and the challenges we are facing in our Cranes segment, we expect our full year earnings to be $0.70 to $0.80 per share, excluding the restructuring and other unusual items and to generate free cash flow of $150 to $200 million.”

Vertikal Comment

This was another tough quarter for Genie, largely due to the ongoing hesitancy of North American rental companies to maintain their usual pace of fleet renewals, in the face of uncertain markets and economic pressures. Not to mention the current political uncertainty.

On the positive side the company had a very successful new product launch and 50th anniversary celebration last month, and has shown that it has some excellent new products to launch over the next six months or so.

The ageing of the North American aerial lift fleet at a time when the end market is not at all bad will also finally break through into some decent replacement business, most likely during 2017. So all in all the future looks relatively bright for the company.