04.11.2008

Skyjack revenues slip 7%

Linamar has reported its nine months results which show steep third quarter decline in both revenues and profits for its Skyjack aerial lift and telehandler business. The results are reported as the Industrial division,which is largely made up of Skyjack.

Nine month revenues were C$ 389 million ($338 million) - 6.8 percent lower than in the first nine months of 2007, while operating income dropped over 40 percent to C$35.3 million ($31 million).

The nine month number mask a steeper decline in the third quarter, when sales dropped over 21 percent to C$108 million ($94 million), while operating income plunged 84 percent to C$2.4 million ($2.1 million).

The sales decrease was due to slower demand, a shift towards smaller lower value scissor lifts, partially offset by additional sales of booms and telehandlers.

Lower margins are put down to the lower volumes, lower margins on boom and telehandler sales during their ramp up phase and the shift to smaller lower margin scissor lifts, along with the higher costs related to the new product development and launch.

Vertikal Comment

Skyjack has a hard road to follow, launching its boom and telehandler ranges at one of the most challenging times for several years. However there is rarely ever a perfect time and Linamar appears to be fully committed to the aerial lift business and seems focused on the medium to long term possibilities, than the next 18 months or two years.

In some respects the timing might ultimately work out well for Skyjack, with other manufacturers cutting back production, while smaller well run local rental companies, many of whom will be more open to Skyjack’s new products, likely to do better than the large rental companies and as a result begin stepping up investments sooner.

Skyjack showed an impressive display of new products at the recent APEX show with a very positive team spirit. If the company can remain focused on the point where the market turns up and continues with its new product investments, it could be very well placed to reap more than its fair share of the benefits as rental company capital investment starts to crank up again. Allowing it to come out of the slow down in a much stronger position than when it went in.