Third quarter 2015 net sales at Manitowoc Cranes were down 23.0 %, to US$ 438 million, against the $ 569 million for the same quarter in 2014.
A company statement reported that “The decline was broad-based, particularly in the Middle East and Asia, which fell well short of our expectations. Slower than anticipated deliveries of VPC crawler cranes exacerbated the weakness.”
Operating earnings for the quarter were $4.3 million, down from $41.6 million in the same period a year earlier. The operating margin was 1.0 % for the third quarter of 2015 against 7.3 % in the third quarter of 2014. Margins were affected by lower production and price pressure made worse by the strength of the US dollar, the USA-based manufacturer said.
In a change of leadership, Glen Tellock, Manitowoc chairman, president, and chief executive officer, has resigned, replaced in the interim by Kenneth Krueger, with immediate effect.
Krueger commented on Manitowoc’s performance, “While our third-quarter results for Foodservice showed solid improvement driven by our corrective actions, Cranes fell short of our expectations. Consistent with the worsening global demand environment impacting the industrial sector as a whole, our shortfall during the third quarter was largely the result of weakness in tower crane demand in Asia and the Middle East, coupled with broad-based softness in all terrain cranes. In addition, we experienced significant delays in crawler crane shipments due to extended reliability testing and operational issues.
“This cycle has proven to be different from any other in recent memory, particularly with regard to customer order patterns. As a result, we are taking a number of aggressive actions in Cranes to offset this decline in demand, including right-sizing the business, plant rationalisations, headcount reductions, and other cost optimisation initiatives. These actions will likely result in an approximate $10 to $15 million restructuring charge in the fourth quarter, and savings of approximately $35 to $45 million over the next three years,” Krueger continued.
Looking ahead Manitowoc forecasts a decline in crane revenue of between 15 and 20 % for the full year 2015.