Margins still weak as Terex revenues rise
By Chris Sleight21 July 2011
Terex's revenues for the first half of the year rose +36% to US$ 2.74 billion, compared to US$ 2.02 billion in the first half of 2010. However, the company's net profit for the period was only US$ 11.2 million - a margin of just 0.4%. Last year the company made a net profit of US$ 500 million in the first half, thanks largely to the sale of its mining equipment business to Bucyrus. Bucyrus has since been acquired by Caterpillar.
Terex chairman & CEO Ron DeFeo said, "We have made progress during the first six months of 2011, but there is still significant work in front of us. We had a strong performance in terms of order and sales activity in the second quarter, but suppler constraints on component deliveries and other operational challenges caused operating margins to be below expectations."
The strongest performance in the first half came from the company's aerial work platform (AWP) business, which sells products under the Genie brand. Sales almost doubled to US$ 861 million in the first half of the year, from US$ 448 million in the first half of 2010. The AWP division achieved an operating profit of US$ 34.2 million, compared to a loss of US$ 22.6 million for the same period last year.
Profits also grew at Terex's materials processing (MP) division, with a US$ 33.4 million operating result on sales of US$ 341 million. Last year the division, which includes the Powerscreen, Terex Pegson and Terex Finlay brands had sales of US$ 244 million and operating profits of US$ 8.9 million.
However, Terex's biggest business, Terex cranes made a loss of US$ 56.5 million on sales of US$ 862 million and part of this was due to a US$ 33 million restructuring charge for "Cost reduction and manufacturing footprint rationalisation."
Terex's construction equipment business made an operating loss of US$ 10.3 million on sales of US$ 704.2 million in the first six months of the year. Terex said that the construction business was particularly affected by its suppliers struggling to keep up with demand for components.