Flat sales at Terex Cranes amid significant change
By Euan Youdale22 July 2011
Proposed restructuring plans, including headcount and facility changes, and the acquisition of Demag Cranes AG will make a major impact in the coming months, according to Terex Cranes' second quarter results announcement.
Net sales in the cranes segment for the second quarter of 2011 increased US$15 million, or 3.3%, to $464.1 million compared to the same period in 2010. When adjusted for currency exchange rates, however, sales dropped 5% in the second quarter.
Rough terrain, truck cranes and mobile port equipment made the most significant contribution to sales, especially in North America, where rough terrain and truck cranes also showed strength, said the manufacturer.
"Tower cranes and some of the large crawler cranes have also experienced positive trends this quarter and the segment is seeing some renewed interest in tower cranes from very low 2009 demand levels," said a company spokesman.
"All terrain cranes have rebounded a bit from soft first quarter levels, although still significantly lower than a year ago. Shifting delivery dates for orders in backlog and order cancellations continue to disrupt current shipment expectations in the German cranes business," the spokesman added.
Cranes segment backlog increased about 33% but decreased about 9% compared to 30 June 2010 and 31 March 2011, respectively.
Loss from operations in the second quarter of 2011 was $34 million, or 7.3% of net sales, compared with income from operations of $17.0 million, or 3.8% of net sales, during the second quarter of 2010.
"We anticipate that Cranes restructuring actions will improve that segment's performance, particularly in 2012. In total, we expect approximately $70 million in annualised benefit from the actions that have and will be taken in that segment. These changes reflect headcount and facility adjustments, and, while painful, we anticipate a stronger and better franchise in the future," said the spokesman.
Terex Port Equipment made substantial progress in the quarter, said the company. While the business was not yet profitable, losses excluding restructuring and related costs were cut in half from the first quarter. The company forecasts the segment will at least break even by the end of 2011.
The company added that the Demag Cranes AG purchase offer has progressed well. "At the end of the extended offer period, preliminary results indicate that approximately 82% of the outstanding shares were tendered for purchase or are already owned by Terex," said Ron DeFeo, Terex chairman and CEO
"Demag Cranes AG will add a new business segment to Terex with world class products in industrial cranes and hoists, port technology and service. Its business is highly complementary to the existing Terex business, and the combination has compelling industrial logic."
The addition of Demag Cranes is forecast to add about $1.7 billion annually in net sales, with its strong footprint in Europe and emerging markets, said the manufacturer. Completion of the offer remains subject to merger control clearance by the European Commission. The transaction is expected to close in the third quarter of 2011.
See linked articles for the full Terex Corporation results.