01.11.2016

Weak quarter for Manitowoc

Manitowoc Crane has reported its full third quarter results, with sharply lower revenues and profits.
The results released today, follow the issue of preliminary numbers 10 days ago. See Preliminary numbers from Manitowoc

Nine month revenues were 7.5 percent lower than at the same point last year at $1.23 billion, due mostly to a sharp drop in sales in North America and Middle East. Pre-tax losses jumped from a loss of $76.6 million last year to $229.7 million this year. The losses are partly caused by a $76.3 million loss on debt retirement around the time the company was split with its Food Services division at the start of the year, an asset write off charge of $96.9 million this quarter and $17 million of restructuring costs.

Looking at the third quarter revenues dropped more than 20 percent to $349.8 million, following a similar fall last year, thanks to lower crane sales in North America and the Middle East. Partly offset by higher sales in Western Europe, especially with tower cranes. The pre-tax loss for the period was $133.5 million compared to a loss of $8.2 million in the same quarter last year – this was due to the $96.9 million of asset write offs - including more than $77 million for “certain software assets” – and $3.9 million of restructuring costs.
The backlog/order book at the end of the quarter was over 44 percent lower than a year ago at $353.6 million, and just over 10 percent down on the second quarter,

Chief executive Barry Pennypacker said:“As previously announced, the mobile crane market continued its downward trend in the third quarter and remains very challenging. The weak global oil and gas market, coupled with lower used equipment prices, continues to have a negative effect on demand. Our tower crane business continues to perform as expected and we look forward to its continued success as the new line of HUP products are introduced in the fourth-quarter.”

“Our priority is to continue to improve our quality, make significant market share gains and right-size the business to current demand levels. We will do this without impacting our long-term strategy of margin expansion, growth, innovation and velocity. We have significantly cut production levels to match the lower demand and accelerated the transition of crawler crane manufacturing from Manitowoc, Wisconsin, to Shady Grove, Pennsylvania. While this will have an adverse impact on our near-term earnings outlook, we expect this action will have a positive impact on our ability to maintain adequate liquidity levels. We continue to transition the culture to one being driven by the principles of The Manitowoc Way and remain committed during this challenging time to our goals of improving our long-term performance and attaining double-digit operating margins by 2020.”

Vertikal Comment

This obviously is a disturbing set of numbers from Manitowoc, and it is pretty certain that 2016 will be a bit of a disaster financially. However a lot is happening very fast in terms of changes within the company and the write offs and costs taken this year should leave the slate clean for 2017. And with sales of Rough Terrains and boom trucks likely to stabilise, while the new tower and All Terrains likely to pick up, 2017 could look a lot brighter. But it might be a bit of a roller coaster until then.