25.10.2007

Terex Cranes profits jump 70%

Nine month revenues at Terex Cranes have increased by 27 percent on 2006 to $1.57 billion thanks to stronger sales of mobile and crawler cranes.

Profits from operations, which does not include interest cost or group overhead, increased by 70 percent to $173 million for the nine months to the end of September.

The strong increase in profitability is driven both by better gross margins – up by almost four percent to just under 20 percent of sales – and the a strong contribution from favourable currency factors.

Margins were helped by the fact that in North America strong sales of Rough Terrain and large truck mounted cranes which carry higher margins, replaced lower sales of boom trucks and small truck cranes which are less profitable.

The slower sales of smaller truck mounted cranes has freed up capacity at the company’s Waverly, Iowa plant to increase production of larger Rough Terrain cranes for which there is strong demand.

The company continues to experience production difficulties due, it says, “to a stressed supply chain and capacity limitations in terms of welding and assembly space.” This shows up in a growing backlog, which says Terex is “tempering its sales efforts”

The company’s order book grew by 71 percent, compared to this time last year, to almost $1.75 billion an increase of 23 percent since the end of June.

The Terex group as a whole reported nine month revenues of $6.55 billion, an increase of 17 percent on the same period of 2006. Net income rose by over 47 percent for the nine months to $440 million.

Ron DeFeo, Terex’s chairman and chief executive officer said: “Our third quarter results reflected a continuation of the many trends we have seen develop over the past few quarters,”

“The underlying story of strong global demand for our products remains intact, contributing to our positive outlook for Terex’s future financial performance. However, the challenge of shortages in component deliveries impacting production output, capacity constraints on certain of our products and a softer North American marketplace for certain products continue to weigh on our business. Overall, we feel our ability to improve our franchise during these generally favorable market conditions is getting stronger.”

“We continue to invest in our business with a focus on long-term benefits to our customers and investors. Our operating expenses have increased versus year ago levels, but these are necessary expenses targeted at improving our capabilities in multiple areas, such as supply management, marketing, global sales and service, information technology and financial services. We will continue to increase our investment in these areas in the future, and we expect that benefits from these investments will become more visible.”

“Our overarching message today is that we are a Company that is poised for continued strong and profitable growth,” said Mr. DeFeo. “We are committed to achieving our previously stated objective of $12 billion in sales and a 12 percent operating margin by 2010. We anticipate that acquisitions will be a part of this growth strategy, and with the recent volatility in financial markets, we are uniquely positioned to take advantage of opportunities as they arise, as well as continuing to invest in expanding our infrastructure in developing economies.”