15.02.2007

Genie breaks $2 billion

Terex Aerial Work Platforms, which largely trades under the Genie brand, saw revenues rise by 41 percent to $2.09 billion.

This in spite of slowing domestic demand for telehandlers and trailer mounted lifts in the fourth quarter.

Gross margins jumped from 19.8 percent or $293 million to 25 percent or $525 million.

Sales and administration costs edged up to $50 million from 6.9 to 7.3 percent of sales, due the company says "to costs of additional resources needed to address higher sales levels combined with expenses related to expanding the international sales and service network".

In spite of this the income from operations almost doubled to $525 million or a sparkling 17.8 percent of sales, up from 12.9 percent for 2005.

The only shadow on the otherwise first class results was the slip in the year end order book from $498 million at the end of 2005 to $419 million at the end of 2006.

“Solid fourth quarter results capped a record year of growth and profitability for Aerial Work Platforms,” said Tim Ford the recently appointed president of Terex Aerial Work Platforms. “The fourth quarter is usually the slowest quarter of the year for aerial work platforms, as our rental customers typically prefer deliveries that match the construction season. But in the fourth quarter, we found that strong demand continued domestically and abroad. Weakness in telehandler sales, particularly the smaller machines that are used for residential construction, was more than offset by solid demand for aerial lifts".

"The strong operating margin of 17.8 percent for 2006, as compared to 12.9 percent for 2005, directly reflects the hard work and success of our Terex team members, who continue to improve production efficiency and product design through the utilisation of lean techniques".

"International demand was robust, with one-third our net sales generated outside of the United States, with profitability on international sales aided by a favorable foreign exchange rate stemming from the relatively weaker U.S. Dollar".

"We are on track to begin production of a Z-boom model at our facility in Italy during the first quarter of 2007 as part of our longer term strategy for meeting European demand with European-based production.”

“We are forecasting 2007 demand to remain at least as strong as it was in 2006 in the U.S. market, with accelerating growth from overseas markets. We expect overseas demand to account for about 40 percent of our revenue for 2007, up from a third of net sales for 2006".

"Our business is primarily tied to non-residential construction and infrastructure investment, areas where we see continued spending and growth, both domestically and overseas. We continue to have lots of hard work ahead of us to meet customer demand and to exceed our customer’s expectations, but we fully expect 2007 to be a stronger year than 2006.”

Terex Corporation

The Terex Corporation as a whole posted revenues up almost 25 percent to $7.65 billion. With net after tax income more than double that of 2005 at $400 million. The group’s backlog grew by almost a $1 billion to $2.49 billion.

“2006 was a year of significant progress on many fronts -- financially, operationally and organizationally,” commented Ronald M. DeFeo, Terex chairman and chief executive officer.

“Financially, we experienced record net sales and net income, and our debt less cash and cash equivalents of $86 million is at a historic low. We retired $500 million of our high cost notes, including the $200 million in notes retired this past January, and substantially strengthened our balance sheet.

Return on Invested Capital, or ROIC, continues to be the unifying metric we use to measure our operating performance. In 2006, we achieved a record ROIC of 38.4%, compared to 21.5% ROIC in 2005 and our 2006 ROIC target of 27.5%.”


“Operationally, we remain committed to making the Terex Business System our Company’s way of life. Lean practices are being adopted by our facilities at an impressive rate. We have identified and acted on significant findings for improvement in our global purchasing. These are both fundamental to our maturing process as a Company. We are updating our understanding of how we conduct business, and should conduct business, in preparation for the roll-out of our global enterprise management system to solidify those practices.”

“Lastly, we have made tremendous steps forward in terms of our operating team. Rick Nichols, president - Materials Processing & Mining, and Steve Filipov, President - Terex Cranes, have flourished. Late in 2006, we announced the addition of three new senior team leaders: Tom Riordan as our president and chief operating officer, Tim Ford as president of our Aerial Work Platforms group, and Robert Isaman as president of our Construction group".

"Each comes to Terex with a strong operating background from well respected companies. Earlier in the year we added Katia Facchetti as our chief marketing officer, a major step forward for Terex as we look to strengthen our distribution, build customer relationships, and increase our brand awareness. But the talent improvements run far deeper in the organization, as we continue to attract the best and brightest individuals, and commit the resources necessary to build a stronger Company and a bright future.”

“Our outlook for 2007 is strong and we expect to grow our franchise even more than we did in 2006. Back in 2004, I articulated a three year stretch goal intended to highlight what I felt was possible for our Company".

"We clearly outperformed our net sales goal of $6 billion in 2006, and made great progress towards our objectives in operating margin and working capital reduction as a percentage of net sales. Today, I am stating externally what I told our leadership team in January 2007: our new medium term stretch goal is to be $12 billion in net sales, with a 12% operating margin, by the end of 2010, or our “12 by 12 in 10” goal. This goal primarily hinges on our execution of the internal opportunities of continuous improvement, supply chain management, and the optimum usage of our asset base, as well as our making selected acquisitions when the opportunities arise.”