Terex Cranes sales up, profit down

10 February 2011

Net sales for Terex Cranes in the fourth quarter of 2010 increased 1.8% to US$549.1 million over the same period in 2009.

Order rates improved except in small all terrain and tower cranes and orders for rough terrain cranes in North America saw a sharp rise, Terex said. Lattice boom crawler crane sales remained soft, as many projects, such as wind energy, continue to be delayed due to macro-economic uncertainty, Terex continued.

"Our Cranes segment is experiencing some short term weakness, but the mobile crane product offering has stabilised. Our port equipment business is showing increasing quotation activity; however, we still expect this business to report an operating loss in 2011.

"We continue to restructure this business and expect it to return to profitability in 2012. And while we expect Cranes to be an improving story as we move through the year, many of our large crane orders, both in mobile cranes and port equipment, will not ship until the latter part of 2011," said Ron DeFeo, Terex chairman and chief executive officer.

Operating profit during the fourth quarter of 2010 was $15.7 million, or 2.9% of net sales, about half that of the same period in 2009. A negative impact was material cost increases, competitive pricing and product mix, Terex said.

Order backlog decreased about 19% compared to a year earlier at 31 December 2009 but was up 15% on the previous quarter. Many of the orders received in the fourth quarter of 2010 were from developing markets China and India.

As a whole the Terex Corporation for 2010 reported a loss of $215.5 million on net sales of $4.42 billion, about half the $407.5 million loss on net sales of $3.86 billion for the full year 2009.

"For Terex, 2010 was clearly a transitional year as we rebounded from the trough levels of 2009 and completed the sale of our Mining business," DeFeo said. "We have seen order rates accelerate throughout 2010 for most of our businesses, including a recent sequential upturn in order rates in our Cranes segment as we secured several large contracts in the fourth quarter for longer term delivery schedules. Markets in Latin America, India and China are driving large crane and off-highway truck equipment demand."

DeFeo continued, "On the operations front, all of our segments increased net sales this past quarter on both a yearly and sequential basis, and three of our four segments had positive income from operations. With increases in backlog and order quotation activity, we are starting to see some positive operational catalysts.

"We have increased production across most of our segments and anticipate further increases throughout 2011 to match the anticipated heightened demand for our products. Although costs associated with increased production will also rise, we anticipate net sales and our income from operations will outpace these costs on a consolidated basis."

DeFeo added, "Our current outlook for net sales in 2011 is $5.0 billion to $5.4 billion, an increase of roughly 13-22% from 2010. Our expectation for income from operations is a profit of $220 million to $250 million."

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