Terex crane sales down as forecast
26 April 2011
Net sales for Terex Cranes in the first quarter of 2011 decreased US$15.4 million, or 3.7%, to $398.3 million compared to the first quarter of 2010.
This was in contrast to other segments in the company that increased sales over the past few months.
The crane segment did fair better in the Americas, however, where there has been signs of economic recovery driven by energy and commercial construction applications.
Demand remained slow for large crawler cranes worldwide, as the market tends to recover later in the business cycle, says Terex. "Also contributing to crawler crane demand weakness was the postponement or cancellation of certain wind projects in Germany and the UK due to reductions in government funding," said a company spokesman.
"Our port equipment products have experienced delivery delays, with these deliveries now expected to take place in the second and third quarters of 2011. Quarterly results related to port equipment products remain somewhat hard to predict with the unevenness of product ordering, tenders and customer delivery," added the spokesman.
Loss from operations during the first quarter of 2011 was $22.5 million, or 5.6% of net sales, compared with a loss from operations of $3.1 million, or 0.7% of net sales, during the first quarter of 2010.
Operating results were negatively impacted by material cost increases, competitive pricing, product mix, and a $5 million charge taken for a customer insolvency, said the company. But they were helped slightly by improved cost absorption, especially in North America.
Larger than expected losses of about $16 million were reported in the port equipment business, mainly due to delayed deliveries and a cost structure that currently remains too high, said Terex.
"The economic recovery is taking hold in many major markets for Terex. As we had previously indicated, we expected our cranes segment to be challenged in the first half of 2011 as we work through the effects of inconsistent demand for many of our larger cranes during 2010," said Ron DeFeo, Terex chairman and chief executive officer.
"This was particularly evident in our port equipment line of business, where we had several customers delay delivery in the first quarter, which led to a larger than expected loss for the segment overall. We expect to deliver these cranes during the upcoming months and for our orders and deliveries to improve as we move through the year. Longer term, we are optimistic about our Cranes segment, as we have seen a significant increase in demand from North America, as well as a continued increase in activity in developing markets," DeFeo added.
See Linked Articles for first quarter results from other Terex business segments.