Military production helps JLG as access sales fall

28 January 2010

JLG Industries' sales of aerial platforms and telehandlers fell by 45.6% to US$200.4 million for the final quarter of 2009, although the company benefited from an additional $527.6 million in revenues for M-ATV military vehicles built for its parent company, Oshkosh Corp. Sales of new aerial platforms and telehandlers fell by 60%.

Including these military sales - JLG produced between 35 and 45% of all Oshkosh's M-ATVs in the period - the division made an operating profit of $13.5 million compared to a loss of $47.0 million for the same quarter in 2008. Oshkosh said sales of new access products actually fell by 60% in the final quarter of 2009 (which is the first quarter of the Oshkosh fiscal year).

The fall in aerial platform sales is dramatic given that the world economy had already entered the financial crisis before the final quarter of 2008. However, Oshkosh points out that JLG benefitted from a backlog of orders that was still being fulfilled at the end of 2008.

Charlie Szews, president and chief operating officer, speaking in a conference call with analysts, said; "End markets for our Access Equipment business remained weak across much of the world but we do believe they bottomed. Equipment utilization of rental rates remained weak and access to credit continued to be a challenge for our customers in this industry."

Oshkosh said it was not expecting a significant change in the access market until the final quarter of 2010.

Mr Szews said the company was seeing more quoting activity and potential buying interest in Asia, Australia, South America, North Africa, and parts of the Middle East. Another trend during the quarter was that sales of telehandlers declined more than aerial platforms, a reversal of the case from JLG's previous several quarters.

The company has reduced inventory levels to the point where it has started to recall some emplyees to produce modles where inventories are too low.

Mr Szews said; "we would expect certainly in North America and Europe that we are looking at flattish to maybe modestly up in 2010 and we are not going to really see any significant improvement probably until 2011".

As a group, Oshkosh saw its sales for the final quarter of 2009 increase from $1.33 billion to $2.43 billion, with net profits of $169.6 million, with the increase largely down to military sales in support of US operations in Afghanistan.

Note: Quotes from conference call courtesy of transcription service Seeking Alpha (www.SeekingAlpha.com).

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