01.08.2008

JLG up 7.5%

Oshkosh, owner of JLG has reported its nine months results to June 30th, which show JLG’s revenues for the period increased by 7.5 percent on an annualized basis. The actual results show a greater increase as JLG was only part of the group for seven months in 2007 compared to the full nine months this year.

In the third quarter sales are up 5.3 percent to $920 million, reflecting a five percent drop in North American sales compensated by a 20 percent increase in sales over the rest of the world, much of it being higher sales of aerial lifts in Europe. Exchange rate gains and increased parts and service revenues also helped boost the company’s overall results.

Operating income over the nine months for JLG was $310 million, more than double that in 2007, however this is comparing nine months with seven months, annualizing the 2007 numbers still shows an increase of over 56 percent. Possibly due to the better product mix – more lifts and fewer telehandlers – along with the higher prices obtained in Europe thanks to the exchange rates and higher sales of high yielding replacement parts.

The company has though eaten into its order book which plummeted from $1.19 billion to $575 million.

As a group Oshkosh revenues for the nine months increased 15 percent to $5.2 billion, while pre-tax profits fell 67 percent to $118 million. In the third quarter the group reported a loss of $46.3 million compared to a profit of $138 million last year.

The third quarter loss was caused largely by a non-cash impairment of intangible assets at Geesink Norba Group the group’s European refuse collection vehicle business.

Robert G. Bohn, chairman and chief executive officer of Oshkosh said: "We delivered solid results in our core businesses in the face of some very challenging end markets. Strong sales of defense products and aerial work platforms highlighted our performance."

"Looking to the fourth fiscal quarter, our earnings forecast of $0.50 to $0.65 per share, includes lower expectations for our access equipment segment. We expect weak residential and non-residential construction in North America and certain areas of Western Europe to limit sales volume in the quarter. We also expect higher steel, fuel and other costs to have a more significant impact on fourth quarter earnings for the access equipment segment, in advance of our product selling price increases, which are effective October 1."

"We will continue to aggressively cut costs and optimise our operations for the benefit of our stakeholders. We are confidently moving forward with a series of actions that will improve our competitive position and our ability to succeed in difficult markets. Additionally, we will continue to invest prudently in growth initiatives to benefit our business when economies recover."

Vertikal Comment

Sadly Oshkosh only publishes limited information on JLG’s results which prevents us from making solid comparisons with prior years and its competitors.

However, what is clear is that JLG has managed to outperform its main aerial lift competitors so far. In addition its overall sales are holding up extremely well given its heavy exposure to the North American telescopic handler market which has apparently fallen by around 25 percent.

Telehandlers are typically less profitable than aerial lifts so the shift in mix has been beneficial for profitability. The company is warning about cost increases which as are all of its competitors. JLG is likely to lead a spate of price increases towards the end of this year, and in spite of lower sales most competitors are likely to follow its lead.

This in itself may well spur a few rental companies to place orders from new equipment, given that most of them are reporting reasonable levels of business.