26.07.2007

Terex Cranes up 29%

Terex Cranes has reported a sharp increase in both revenues and profits while its order book has ballooned by 75 percent.

Revenues in the first six months were $1,045 billion, an increase on the same period last year of more than 29 percent. Margins improved substantially, with gross profit coming in at $202.6 million - 19.4 percent of sales compared to 15.6 percent in 2006.

Income from operations was up 75 percent to 109.8 million or 10.5 percent of sales. The backlog also jumped by 75 percent to $1,414 billion or over eight months. Delivery times for many crane models is of course significantly greater than this.

Steve Filipov, President of Terex Cranes said: "The global market for cranes continues to be outstanding, and our manufacturing locations are making real improvements in our ability to increase throughput.”

“Also leading to increased sales is a shift towards larger cranes, such as our large crawler cranes from Germany and rough terrain cranes in North America, as well as the favorable impact of pricing. That said, global demand for our products continues to outpace supply, as evidenced by our record backlog."

"Our challenge is meeting this demand. Our factory performance continues to improve, but the unprecedented demand for cranes continues to stress our supply chain and our internal operations, such as welding capacity.”

“As we previously mentioned, we will address the limited supply of certain components and production bottlenecks through improved coordination with our suppliers and implementation of lean principles to better utilise our manufacturing footprint.”

“It is difficult to gauge the timing on these productivity improvement initiatives, but we certainly believe there is room for significant financial improvement.”


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, favourable product mix in certain businesses, the positive impact of pricing and internal initiatives.”


Vertikal Comment

Unlike the aerial lift market the delivery situation for cranes is the same for every ‘western’ manufacturer with absolutely no respite on the horizon.

The world is experiencing the double whammy of increased overall demand together with a catch up from several years of under investment by crane operators.

In many parts of Europe long lead times and high used crane prices is gradually bringing better rates to a rental market that has largely lacked discipline and professionalism in this area for a very long time.

The danger though is that a long term disparity between supply and demand will provide new suppliers, such as the up and coming Chinese crane producers, an opportunity to expand out of their home markets at a pace that would simply not have been possible.

These are dangerous times for European and American crane manufacturers, in terms of their long term strategies and success.