Terex Cranes rides rough 2009

Terex saw net sales in its cranes segment drop 25.2%, $187.8 million, to US$557.2 million in the fourth quarter of 2009, compared to the same period 2008.

Excluding the translation effect of foreign currency exchange rate changes, totalling some $50 million, as well as acquisition related net sales of about $53 million, net sales decreased about 39% in the fourth quarter.

"Customers continued to purchase high capacity crawler and all-terrain cranes during the fourth quarter of 2009, driven by global infrastructure and power projects.

Lower capacity crane demand deteriorated in the fourth quarter of 2009 compared to the prior year period, as sales of tower cranes, rough terrain cranes and lower capacity all-terrain cranes were impacted as commercial construction continued to soften," said a company spokesman.

The crane segment took an operating profit of $22.9 million during the fourth quarter, a decrease of $74.5 million compared to the $97.4 million generated in the final period of 2008. Operating margin decreased to 4.1% compared to 13.1%.

Lower net sales had a negative impact on profitability by about $71 million, reported the company.

Slower production rates and reduced schedules for certain product lines, including tower and rough terrain cranes, resulted in an increase of $17 million, in underabsorption, compared to the fourth quarter of 2008.

Other cost reductions of $11 million were mainly driven by lower material costs, particularly high tensile steel used for crane booms.

Overall, Terex Corporation reported a net loss from continuing operations of $114.8 million, or $1.06 per share, compared to a net loss of $452.3 million, or $4.78 per share, for the fourth quarter of 2008.

Net sales were $1 billion in the fourth quarter of 2009, a decrease of 36.1% from $1.7 billion in the fourth quarter of 2008. Net sales decreased about 41% from the comparable prior year period when adjusting for the translation effect of foreign currency exchange rate changes.

The results exclude the mining and Load King trailer businesses, which are classified as discontinued operations in the company's financial statements following their sale.

The 2010 outlook remains challenging for the group according Ron DeFeo, Terex chairman and chief executive officer, although it is believed that performance will improve during the year. "We see relative stability in our end markets and believe we need to capture market share in order to grow. To do this, we will introduce several new products across a range of our businesses and complete new factories in India and China that will support our business later in 2010 and beyond.

"We expect to continue to incur operating losses in the first half of 2010, and expect to return to operational profitability in the second half of the year. Additionally, we anticipate that our income from operations in the fourth quarter of 2010 will more than offset our interest expense for that period. Given the challenging environment for our industry and our company, we believe that we are in a good position to capitalize on future growth and profit opportunities," Defeo concluded.