Terex profits leap but margins still weak

By Chris Sleight20 February 2013

Ron DeFeo, Chairman and CEO at Terex

Ron DeFeo, Chairman and CEO at Terex

Terex’s net profit for 2012 was up +134% on the previous year to US$ 106 million., while the company’s revenues climbed +13% to US$ 7.35 billion. However, this gave the company a net margin of just 1.4% - an improvement on 2011’s profitability of 0.7%.

Commenting on the results, Terex chairman and CEO Ron DeFeo said, “We made significant progress in 2012. Our primary goals were margin improvement, cash generation and the integration of Demag Cranes AG.”

He continued, “We are optimistic about our business as we begin 2013. We are seeing improvements in many of our end-markets and believe the macro-economic uncertainty that affected our fourth quarter performance will abate by the middle of 2013.”

In terms of revenue growth, the biggest driver came from the acquisition of Demag Cranes AG, which helped drive up sales in the company’s materials handling and port solutions (MHPS) division by +71% to US$ 1.84 billion. There was also 20% organic growth in Terex’s AWP business, which sells products under the Genie brand. With revenues of US$ 2.1 billion last year, this remained Terex’s largest single business line.

However, the company’s construction equipment business was down -13% to US$ 1.31 billion and made an operating loss of US$ 18 million. There was also a 3% fall in sales for both the Terex’s cranes and materials processing units.

“We continue to take strategic actions in our construction segment,” said Mr DeFeo. “We recently announced an agreement to sell or exit the majority of our roadbuilding product lines. In addition, we plan to exit a number of compact construction component manufacturing businesses in Germany. Many of these businesses were generating poor returns and we expect these actions to improve operating results as the year progresses.”

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