24.04.2008

Genie up 7%

Terex Aerial Work Platforms which largely trades under the Genie brand, saw first quarter 2008 revenues increase by 7.1 percent, to $586.6 million compared to the same period in 2007. 5.1 percent of the improvement was due to increased volume while the balance was due to currency gains.

Income from operations was up 7.5 percent to $106.6 million or 18.2 percent of sales, compared with 18.1 percent last year.

The company says that strong U.S. demand combined with strong sales in the Middle East, Russia and Eastern Europe. Sales in western Europe were off due to “a merger of several customers occurred in Western Europe that negatively impacted sales in that region due to a temporary halt in capital expenditures while those customers reviewed their total fleet composition.”

The better than expected sales in the USA helped to offset slightly weaker sales against forecasts in the Western European and Asia Pacific regions. Demand for boom lifts boosted the company’s sales, but this gain was offset by slower telehandler sales in both the U.S. and Europe.

Operating margin in the first quarter of 2008 was essentially flat when compared to the first quarter of 2007, as increased sales volume was offset by costs associated with the expansion of global sales and distribution infrastructure.

The company’s order book at the end of March was $701 just 3.8 percent higher than this time last year and over seven percent up on December 2007.

The Terex Group as a whole saw sales grow by almost 17.5 percent to $2.363 billion, while pre tax profits jumped by over 35 percent to $246.5 million.

Vertikal Comment

While Genie’s growth is slower than recent years, it is still quite respectable given concerns in the market. The jump in US sales is surprising given the state of the housing market and its effect on the US telehandler market. It clearly reflects the fact that a number of rental companies are directing their investments towards products that are targeted at commercial construction rather than residential.

Genie has certainly suffered in Western Europe particularly from Lavendon’s purchase of DK Rental and The Platform Company, both large Genie buyers. Lavendon has not only put purchases on hold but cancelled a number of orders.

Western Europe should recover from this in the second quarter but possibly not to the levels that Genie had originally forecast.