01.11.2018

Tough quarter for Terex Cranes

Terex Cranes has reported falling profits on flat third quarter revenues, but improved order intake.

Total sales for the nine months to the end of September improved nine percent to $950.5 million, while the company’s operating lost increased from a loss of $16.8 million last year to $36.1 million this year.

Moving on to the third quarter numbers revenues were virtually flat at $301.2 million, on stronger order intake which helped boost the order book by 20 percent. Pre-tax losses were substantially higher at $14.2 million compared to just $300,000 last year.

Terex Cranes president Steve Filipov said: “Our new products, including the Demag line of All Terrain cranes are selling well - our customers want the product. Our Utilities business is consistently meeting customer needs in a relatively stable market and our Tower Cranes business continues to grow and execute well with new products and customer-focused solutions. We have a strong order book and remain committed to improving cranes performance and meeting the needs of our customers.”

Terex as whole achieved year to date revenues of $3.89 billion an increase of almost 18 percent on this time last year, while pre-tax profits more than doubled, from $85.6 million to $194.5 million.

Terex chief executive John Garrison said: “We increased sales, bookings, and backlog in the quarter. Aerial Work Platform bookings grew by 50 percent to $601 million, reflecting continued strong demand for AWP products across all our major regions. Overall backlog increased by 41 percent to $1.6 billion, led by a 72 percent increase in Material Processing.”

“AWP continues to execute well, meeting growing customer demand and improving operating margins despite input cost headwinds including tariffs. MP had another excellent quarter. It improved its operating margin again, as it continues to execute very well across its portfolio of businesses.”

“As a result of supply chain challenges our mobile crane operations did not achieve its production plan. That led to lower Cranes revenue and margin in the quarter which impacts our outlook for the full year.”

“We continue to implement our Execute to Win priorities. We are seeing benefits from our Commercial Excellence initiative in our market performance and executing plans in Strategic Sourcing and Lifecycle Solutions designed to significantly improve future performance.”

Vertikal Comment

Terex continues to struggle with production efficiencies, supply lines and a parts supply issues this summer when the company transferred the parts operation to the Netherlands. All of this has made the job of rebuilding the business and company reputation more challenging. The products are however becoming well accepted again and proving to be very reliable. In the meantime its latest luffing jib tower crane looks like a real winner.

The company needs to get past the heavy restructuring that it has been undergoing, and begin building on the solid reception that its new products are now generating.

Expect another tricky quarter, with a possible a stronger pick up and solid progress in 2019. More details on the third quarter are likely to come out in tomorrow’s conference call, and we will update this item as we learn more.