24.07.2008

Terex Cranes up 38%

Terex Cranes has reported first six months numbers which show a 38 percent jump in revenues to $1.44 billion, while operating profits leapt by 93 percent as the company stepped up its production efforts.

The company’s order book increased by over 45 percent on the mid point of 2007, but has fallen by six percent since the end of March. This is due to the fact that Terex has not yet accepted firm orders for a variety of crane types, mainly Rough Terrain cranes, for delivery after January 1.

The purpose of this is to ensure that prices for 2009 deliveries “reflect the demand environment and potential input cost increases of the business.”

The value of orders that have not been included totals around $484 million at current pricing levels.

Operating income for the crane business fro the first half was $212 million, an increase of 93 percent on the same period in 2007.

The company says that the increase was primarily driven by higher volume and favorable sales mix, combined with historical pricing actions working through the backlog. The crane 'mix' in the quarter was oriented towards higher margin larger capacity cranes.

It also said that supplier constraints in Europe for select components, such as hydraulics and gear boxes, have begun to improve, as have welding and assembly capacity constraints.

Capacity changes are being implemented in the company’s crane facilities, which are expected to increase their throughput while minimising the addition of fixed costs. Particular focus is on the group’s German and Chinese crane manufacturing locations.

Terex Group

Terex group sales increased by over 23 percent to $5.3 billion while its overall backlog is up 11.2 percent on this time last years and up by over 12 percent since the end of March.

Pre tax profits jumped by almost 33 percent to just under $600 million.

Ron DeFeo, Terex chairman and chief executive officer said: “Results this quarter demonstrate the continued strength of our global franchise. The infrastructure and commodity boom is driving strong demand for our cranes and mining equipment.”

“Based on our increasing backlog for these products, we expect these positive trends to continue. Also, as expected, this was partially offset by slower growth trends in the Aerial Work Platform segment and further softening in the Construction segment. Though both AWP and Construction experienced growth this past quarter, slower growth in Western Europe impacted their performance.”

“Not surprisingly, input costs continue to present challenges for us. To offset this, we are implementing various price increases and maintaining cost discipline. While in total we expect higher pricing will largely offset the cost increases that we have already incurred, as well as additional cost increases that we expect to incur during the second half of 2008, we do expect that there will be a lag between when higher costs are incurred and price increases to our customers take effect. Accordingly, we anticipate some reduction in operating margin in our business during the remainder of 2008.”

“We expect our performance for 2008 to be within our previously announced range for earnings with net sales of $10.5 to $10.9 billion. We expect strong infrastructure and commodity demand for our Cranes and MPM segments to continue, which will drive a higher portion of our net sales and income for the balance of 2008.”

Vertikal Comment

The market for cranes continues to be rock solid, with the exception of those units that are orientated towards residential construction, such as small to medium sized boom trucks.

The next two years look pretty well set to be strong ones for crane sales, the only apparent risk is that escalating prices and a fall in residential and light commercial construction, will have a negative impact on purchases of smaller cranes.

Overall the picture for crane sales looks very bright.