JLG maintains sales but forecasts decline
By Murray Pollok04 August 2008
However, Oshkosh is anticipating slower sales in some major European markets in the fourth quarter (to the end of September) as well as a continued decline in North America. As a result, the company has announced that it will lay-off 600 hourly paid and salaries staff as part of a cost reduction effort, with most of these redundancies already made.
JLG's backlog at 30 June 2008 was $574.5 million, down 51.7% compared to June 30, 2007 and down slightly from March 31, 2008.
JLG's owner, Oshkosh Corp, said the third quarter revenue increase was due to higher demand in Europe, as well as favourable exchange rate changes and increased aftermarket sales. These were offset by lower telehandler sales worldwide as well as the North American decline.
Robert G. Bohn, chairman and chief executive officer of Oshkosh Corporation, 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."
In the company's conference call, Mr Bohn expanded; "order activity in our European access equipment business didn't reach our expectations in June and that was compounded by late, multiple order cancellations in the region. Despite that situation, in the third quarter, we delivered nearly 30% sales growth in our European access equipment business [half of this relates to favourable currency rates] and 27% operating income growth in the segment."
Mr Bohn said the company expected fourth quarter access equipment sales volumes to decline in several Western European countries as those economies slow down; "Coupled with the North American access equipment downturn that we began to face earlier in the year, and steel and other cost increases bearing down on us, we now expect much lower access equipment operating income in the fourth quarter."
Charlie Szews, president of Oshkosh, said he expected demand in Spain, the UK and France to remain soft into 2009; "we believe that our European business will be supported into 2009 with pockets of strength in Western Europe and continued demand across Eastern Europe...Emerging markets for access equipment, like Russia, the Middle East, Latin America and Asia, remain solid due to strength in commodity pricing and infrastructure projects, and are becoming larger parts of JLG's overall business."
Oshkosh now expects JLG's revenues to grow by 20% for the year as a whole, which will mean a decline in sales in its fourth quarter. "The reduction in our outlook compared to our May 1 estimates is based primarily on a recent slowdown in Western Europe, with some on-going weakness in North America", said Mr Szews, "We expect that North American sales in the fourth quarter will be down more than 30% compared with last year's fourth quarter, with European sales expected to be down slightly."