26.07.2007

Genie up 14.5%

First half sales at Terex Aerial Work Platforms, which largely trades as Genie, were up by 14.5 percent on 2006 to $1.188 billion, a new record. Income from operations increased by almost 30 percent to $246 million.

While the second quarter sales growth was not as strong as that seen in the first quarter, the company reports continued strong international demand, particularly from Europe.

Revenues and profits were also boosted by the weak dollar as European sales in Euros and sterling are translated back in to dollars.

In North America aerial lift demand remained roughly at the same levels as last year, while telehandler sales declined sharply.

Overall the division’s order book/backlog increased by 18 percent to $789 million, although based on second quarter revenues, this represents 2.4 months compared with 2.6 months at the same point last year.

Sales & General administration costs increased to eight percent of sales from 7.2 percent last year, as the company stepped up investment in its marketing in Europe and the Middle East.

Tim Ford, president of Terex Aerial Work Platforms said: “Sales to Europe and the Middle East drove much of the improvement versus the prior year, as global demand fueled by large infrastructure projects increased demand for our products, particularly large boom lifts over 60 feet in operating height.”

“With regard to the U.S. market, demand in the second quarter remained substantially similar to 2006 levels for aerial lift products, although sales of the telehandler product line decreased sharply, reflecting weakness in the North American residential market.”

“Looking forward, we continue to forecast strong international growth for 2007 and beyond, favorably driving results for our segment. As mentioned in our first quarter release, one of our main challenges is the time and investment required to ship our products from our existing facilities, mostly in the U.S, to customers around the world. We started shipping our Z-boom product this quarter from our manufacturing facility in Italy, and we have announced plans to start a scissor lift production line in the United Kingdom this year in one of Terex’s existing facilities.”

“Exceptionally strong margin growth for the AWP Segment year-over-year has been driven by product mix, the favorable impact of currency exchange rate movements, manufacturing efficiencies, and, to a lesser extent, pricing actions, primarily in Europe.”

“As mentioned previously, boom lifts, our highest technology product as well as our best margin product, are in high demand to support global economic development. In contrast, our telehandler product line, and our North American telehandler product in particular, delivers a significantly lower margin, reflecting its simpler technology, combined with a larger number of competitors.”

“The shift in sales concentration towards boom lifts is favorable for Terex, and we expect that this favorable mix dynamic will continue
for some time.”

Terex Corp

Terex as a whole saw revenues increase by almost 18 percent to $4.35 billion, while gross profit rose by 31 percent to 919 million and net income after tax jumped 52 percent to $288 million.

The company has increased it full year revenue forecast to between $8.8-$9.0 billion, compared with its original estimates of”$8.2 and $8.5 Billion.

Ron DeFeo, Terex chairman and chief executive officer said:
“ We are pleased with the strong performance of our overall business in the second quarter, given our continued steps forward on internal improvements, combined with a global economy that we anticipate remaining strong for the foreseeable future, we remain positive in our outlook for Terex’s financial performance.”

“We continue to monitor closely our operating performance as measured by many key metrics, and in most of these measures we have made great strides forward, such as a 2.3 percentage point improvement in our gross margin.”

“The margin expansion was the result of increasing international business, favorable product mix in certain businesses and the positive impact of pricing and internal initiatives.”


Vertikal Comment

Once again this is a strong performance from Genie, although there are sings of a slowing market. Clearly telehandler sales in the USA are suffering as the market slows with the housing slump. Genie may be seeing a greater fall off than JLG here, given that it imports a good part of its range form Europe and has seen its margins slide.

The aerial lift business is growing faster in Europe, and Genie has confirmed that it will begin scissor lift production in the UK next year, almost certainly at its plant in Coventry.

However the additional scissor facility, along with the production of Z45 and 51 in Italy means that Genie will have significantly more production capacity at a time when the market is likely to be growing at a slower pace than in recent years.

If delivery times begin to fall so might some of the forward orders, this is a time for manufacturers such as Genie to keep a close eye
on production capacity in relation to delivery times.

The market has largely adjusted to current lead times and the restraint this puts on rental capacity growth which has led to better rates and improved pricing discipline.

Everyone looses if this balance is lost.