Sales of large crawlers help Terex
By Alex Dahm27 April 2010
Net sales in the Terex Cranes segment for the first quarter of 2010 decreased US$29.3 million, or 6.6%, to $413.7 million compared with the first quarter of 2009. Excluding the translation effect of foreign currency exchange rate changes of around $27 million and acquisition related net sales during the first quarter of 2010 at about $74 million, net sales were down about 29% against Q1 2009.
Demand for lower capacity cranes, in particular, all terrains, was down compared to Q1 2009, as commercial construction demand remained soft, according to Terex. Sales of large crawler cranes continued, even increasing, Terex said, during the first quarter of 2010, driven by global infrastructure and power projects. Demand for tower and rough terrain cranes was stable but at a low level.
Terex Cranes posted an operating loss of $3.1 million in the first quarter of 2010, a decrease of $32.7 million compared with an operating profit of $29.6 million in the first quarter of 2009. Lower net sales, offset by the mix of larger cranes in the production schedule and the impact of lower material cost, reduced profitability by about $17 million. Restructuring charges in the sector were about $8 million.
For Terex Corp as a whole, net sales were $935.9 million in the first quarter of 2010, a decrease of $29.9 million, or 3.1%, from $965.8 million in the first quarter of 2009. Excluding about $56 million from the positive impact of foreign currency exchange rate changes and net sales from the Port Equipment business, net sales were down 17%.
Tom Riordan, Terex president and chief operating officer, said, "Overall, order activity in most of our product categories increased during the first quarter of 2010 compared with the previous quarter and previous year periods. However, our Cranes segment experienced a backlog decline compared with the fourth quarter of 2009. Specifically, softening of the all-terrain crane order book, as well as improving delivery capability of the Terex Port Equipment business, led to a $157 million decline in Cranes backlog. A developing trend is an improved global outlook for larger crawler cranes, and we've recently added more of these cranes to our 2010 production schedule."
Total order backlog for Terex Corp was about $1.2 billion at the end of the first quarter 2010, down 24% and 3% from 31 March 2009 and 31 December 2009, respectively. Cranes account for the majority of the backlog but it was down 38% in the segment compared to a year earlier and down 16% for the full year 2009.
"First quarter results were in line with our expectations. Clearly, we had significant gains from the sale of the Mining business but we also had a stable, but low, level of operating performance from continuing operations," said Ron DeFeo, Terex chairman and chief executive officer.
"We see tangible signs of an improving environment, with moderately positive order activity in many of our early cycle product categories versus year ago levels. While we believe end markets will not provide much sales volume benefit in 2010, current trends have increased our confidence in a more robust 2011 operating environment. We remain confident in the long-term outlook for our business and are focused on achieving positive earnings per share (EPS) performance exiting 2010, as we have previously indicated," DeFeo continued.