10.11.2008

Palfinger up 20%

Austrian based crane and access manufacturer Palfinger has reported nine month revenues of €607 million, an increase of more than 20 percent on the same period last year.

€58 million of the increase came from acquisitions, with Wumag – onboard for two months – adding €10.25 million, while tail lift manufacturer MBB contributed €48 million. Organic growth added €44 million of which €31 million came from cranes and €13 million form Hydraulic services.

The trend in the third quarter was less positive, with revenues climbing by just 12 percent to €184 million, due to a slow up in order intake and the fact that the company closed its plants for four weeks annual holiday this year, compared to two weeks in 2007, when lead times were excessive.

Palfinger says that crane sales were down in Spain, the UK and Italy, but more than compensated for by Germany, France, Scandinavia, Eastern Europe, Brazil and Chile.

While revenues continued to grow, profitability slipped due to lower margin tail-lifts taking a larger part of the total revenues, a sales trend towards smaller cranes and some increases in material costs.

EBITDA and EBIT dropped a couple of points as a percentage of total sales, but in € terms were both up, while pre-tax profits dropped to €73.7 million a fall of almost three percent. For the quarter the situation was more extreme with EBIT falling 30 percent and pre-tax profits plummeting 37 percent to €14.2 million, which includes a significant increase in interest costs associated with the recent acquisitions.


Chief executive Herbert Ortner said: “The uncertain economic situation prevailing in many of our core markets is a great challenge for Palfinger, especially because its ramifications cannot be predicted right now. But at the same time we also see numerous opportunities for the months to come and the year 2009. We are in an excellent position in terms of regions, products, and finances and enjoy the reputation of being a reliable business partner. This is a valuable guarantee for our customers. Our sound financial basis also allows us to actively participate in the consolidation process already underway. Consequently, in the past twelve months we have successfully concluded three major acquisitions which have contributed to our international growth and solidification of our market position”,


Palfinger has implemented what it calls “capacity adjustments” by introducing flexible working time for its staff and a reduction in the number of temporary employees.

Taking a look at the individual quarters the impact of the extended company holiday, of the change in product mix, and of the inorganic growth in the area of hydraulic systems in the third quarter 2008 is clearly visible. Revenue in the third quarter 2008 was significantly lower than in previous quarters (Q1 2008: EUR 208.9 million; Q2 2008: EUR 214.5 million; Q3 2008: EUR 183.7 million) but because of the acquisitions it was raised by EUR 19.7 million as compared to the third quarter 2007. In the third quarter EBIT (Q1 2008: EUR 29.6 million; Q2 2008: EUR 30.0 million; Q3 2008: EUR 15.4 million) was EUR 6.9 million – around 30 percent – lower than the figure of EUR 22.4 million of the same period of the previous year.

Outlook
Palfinger is still forecasting double-digit revenue growth for the full year 2008 due primarily to acquisitions. In the crane business it expects the fourth quarter will cause the full year results to be below those for 2007.

This will be offset by changes in the other segments of Palfinger’s business, which should begin to benefit from both the acquisitions and the restructuring that the company has been doing.

It expects margins to remain high, but fall below that achieved in 2007.

Wumag

Palfinger has revealed that it paid a total of €17.45 million for Wumag and that the company has generated nine month revenues of €28.2 million with a net profit of €735,000.

Truck cranes

Palfinger has also reported strong order intake at its Brazilian mobile crane operation that it operates in partnership with Sennebogen. As a result it has now started to take down payments with all new orders.

Vertikal Comment

Palfinger like virtually every other equipment manufacturer - outside of the larger crane producers – has seen the current economic uncertainty hit its order intake at the same time as rising material costs have increased costs.

In spite of this the company is well placed to continue its recent dynamic growth which has seen it double its revenues in less than four years. While carving out a significant position for itself in the truck mounted lift market.

While the next year or two will be tougher than the past two, Palfinger is very well set up to take advantage of any opportunities that might come its way with its relatively low leverage, strong balance sheet and closely held ownership.

It has also demonstrated over the past few years how it can get to grips with restructuring its manufacturing operations and should begin to see significant improvements in its tail lift and other road going material handling businesses.

Palfinger is likely to better than most through the challenges that next year might bring and will most likely come out the other side in an even stronger position than it currently enjoys. In 2010 check back to this article and see if we were not right!