15.02.2007

Terex Cranes up 37 percent

Terex cranes saw revenues rise by almost 37 percent in 2006, compared to 2005 hitting $1.74 billion up from $1.272 in the previous year.

Gross margins rose substantially from 13.4 percent of sales to 16.8 percent or $293 million. Margins were boosted by pricing increases combined with costs reductions from “volume leverage on manufacturing costs, partially offset by certain cost pressures from suppliers” said the company.

SG&A costs rose by $28 million but fell as a percentage of sales to eight percent compared to 8.7 percent in 2005.

The net effect was a rise in operating income of 256 percent to $155 million or 8.9 percent of sales compared to 4.7 percent in 2005.

The crane groups backlog more than doubled from $453 million to $1.13 billion.

Steve Filipov president of Terex cranes said:

"The Terex Cranes segment had a terrific quarter, achieving an operating margin in excess of 10 percent for the first time in many years. Additionally, revenue growth continued to be robust, increasing over 44 percent versus the comparable period in the prior year, highlighting the continued increasing global demand for our products and our improving ability to meet this demand,"

"More importantly, operating profit for the quarter grew approximately 102 percent versus the prior year's results. Performance improvements continued to come from all of our businesses, with all product lines contributing significantly, and illustrates the value of our diverse portfolio of lifting equipment and our global manufacturing footprint”.

“Our Chinese operation, Sichuan Changjiang Engineering Crane Co., Ltd., had strong results this quarter, and we remain excited about the future for this business and Terex Cranes in China."

"Our backlog, besides highlighting the strong business environment in which we operate, also illustrates issues that we continue to face as we increase our production schedule. Our customers need our products right away, and we continue to struggle with the limited supply of certain components".

"We are working diligently to eliminate the production bottlenecks at our various locations and to better utilize the space we have and implement lean principles in order to improve overall production rates."

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.”