27.02.2007

Gehl reports Telehandler slow down

The Gehl Company has reported record results for 2006 with sales up by nine percent to $486 million, driven by strong demand for most of the year and rising prices.

However the company reports that the statistics for the North American telehandler market show a 22 percent fall in the fourth quarter. It says though that it managed to increase own telehandler sales in the same period by 7.4 percent increasing its share of the overall market.

Margins at the company improved by almost one percent to 21.5 percent thanks to higher prices and reduced costs. Net income was $28 million an improvement of almost 28 percent on 2005.

The company’s backlog as of February 23rd was down by 42 percent on the same date in 2005, although it is up by 131 percent, it says compared to what it was at year end in December. It adds that a number of buyers delayed deliveries due to the availability of inventory and shorter lead times.

Gehl gives a fairly gloomy view for the market in the first quarter of 2007 stating that it believes that markets for its products will slip by between five and 30 percent. With the first half being slightly better and then picking up steadily in the second half as the housing market begins to improve.

In spite of these forecasts Gehl expects its 2007 revenues to be similar to those of 2006.

The company has increased its production capacity and also began selling compact telehandlers built by Manitou and sold under the Gehl brand.


Vertikal Comment

Gehl has simply confirmed what we all know, that the fall in US housing starts in the second half of 2006, driven by the soft property market, would eventually impact on telehandler sales. This is though coming at a time when additional capacity has been added by several producers, including JCB and Gehl.

The company most vulnerable to North American telehandler sales is of course JLG which commands a market share in the region of 60 percent compared to a share outside of the region below 10 percent.

If Gehl’s market numbers are accurate then JLG must have lost some market share in the fourth quarter in a declining market as has Terex/Genie. This will not be good news to Oshkosh which acquired JLG in December, although it has made it crystal clear that it bought JLG for the long term potential and will not be phased by short term market fluctuations.

It must though spur on JLG’s efforts to increase its market share in the world’s largest telehandler market, Europe. With JCB determined to catch Manitou, while Manitou determined to maintain its market leading position, things could get interesting.