20.04.2008

USA causes Hiab to dip

Loader crane manufacture Hiab, part of Finland’s Cargotec, has reported a four percent decline in revenues for the first quarter of 2008 to €230 million.

The company said the drop was due to “the marked fall in demand in the United States, for which strong growth in Europe and Asia could not fully compensate.” As well as a shortage of trucks in Europe which delayed some shipments.

Operating income for the quarter was €17.7 million or 7.7 percent of sales, a fall of 27.5 percent from the first quarter of 2007 when OI was over 10 percent.

Order intake in the same period declined by around 12.5 percent compared to 2007 to €228 million. Hiab says that order intake grew in Eastern Europe and Russia, along with the Middle East, China and India. Demand for its new XS 1055, Hiab's largest loader crane to date has also been strong.

The company’s order book grew from €237 million at the same point in 2007 to €253 million, an increase of seven percent.

In spite of lower sales recent acquisitions have boosted Hiab’s workforce by over 22 percent to 4,592.

Parent Cargotec increased revenues by over four percent to €727 million, thanks to stronger sales at marine crane company MacGregor and reach stacker producer Kalmar.

Group pre tax profits fell substantially to €39.4 million or 5.4 percent of sales, a drop of 12.5 percent compared to last year. The company expects to pick up the first quarter shortfall as it progresses through the year, thanks to strong order books at all three divisions and recent acquisitions.

Vertikal Comment

Hiab is probably more susceptible to the housing market in the USA than its main competitors such as Palfinger. In the first quarter of 2007 over 25 percent of Cargotec's revenues came from the Americas, this has dropped to just 16 percent in the past quarter.

Hiab has been focusing heavily on the acquisition of local service and supply businesses (its dealers) which has boosted its workforce but not yet fed through to its results.

Its main competitor has taken a significantly different approach preferring to stress its reliance and partnership with independent dealers. It will be interesting to compare the two differnt strategies.