01.05.2008

JLG up almost 15%

JLG has reported its fiscal half year results to the end of March 2008, a comparison of the year to date numbers is not practical as only 4 months of JLG revenues were included in Oshkosh’s 2007 first half.

We can though compare the second quarter numbers and these show revenues up by 14.9 percent to $813 million. JLG says that sales in North America plummeted by 20 percent, thanks to substantially lower sales to major rental companies. At the same time international sales were almost double those for the same period in 2007

Operating income at the company leapt by 133 percent to $123.6 million. The second quarter 2007, to which it is compated, was negatively affected by an $8 million charge. Most of the growth has apparently come from the favourable geographic and customer type split in terms of pricing as well as currency exchange gains.

The information on JLG’s sales provided by Oshkosh is minimal, although the company says that some of the shortfall in the USA is down to the fact that major accounts are choosing to place small orders throughout the year rather than place large orders at the start of the year. However the fall in the telehandler market would have also had an impact

JLG’s backlog dropped from $1.3 billion to $905 million a fall of almost 30 percent.

Oshkosh as a whole reported sales up 6.5 percent to $1.77 billion, with pre tax profits rising by 49 percent to $111 million.

Robert G. Bohn, Oshkosh chairman and chief executive officer said: "We are pleased to be reporting sales and earnings records for the second fiscal quarter. While we faced some significant challenges in several of our markets, their effects were overcome by sharply higher sales in global markets for our JLG access equipment business as well as an on-going need for defense vehicles."

"Strong penetration in markets outside North America with our access equipment customers bolsters our perspective as we move forward.”

"The results in our commercial segment were below expectations due largely to weak U.S. residential construction and changes and inefficiencies related to the consolidation of facilities at our European refuse collection vehicle business.

"While these conditions and recent raw material cost pressures created significant challenges, we are confident in our business model. Our products are leaders in their markets, and they provide us with competitive advantages that are invaluable in tough times. We are investing in product and process improvements that we expect will strengthen our value proposition. We are also continuing our commitment to cost reductions and expanding globally. These actions form the foundation of our optimism at Oshkosh and are intended to keep growing our company now and in the future."

Vertikal Comment

These results are surprising from two points:

One that the US sales seem to have dropped more steeply than its competitors, although this may well be due, almost entirely to the fact that with around 60 percent of the US telehandler market, which has taken a hammering due to the
fall off in residential construction it has suffered far more than those whose sales are predominantly made up of aerial lifts…. And

Two the fact that International sales doubled, this hardly seems likely to have come from Europe, although Russia and Eastern Europe is performing well. One factor that might be affecting this year’s numbers compared to 2007 is that the company is now shipping the new CAT telehandlers in volume?
For the past 12 months or so CAT buyers have held off ordering too many telehandlers while they waited for the new models to start shipping.

Currency will also have been a factor and possibly a positive product mix, with more larger booms shipped in the quarter, this would also explain the drastically improved margins.

All in all not a bad result.