Terex says AWP recovery still 12 months away
By Murray Pollok23 July 2009
The company said its core rental markets in North America and Europe remained "very depressed" with buyers deferring their purchasing and aging their rental fleets. Still resisting the slowdown, however, was the division's utility equipment arm - which sells insulated aerial devices, digger derricks and underbridge inspection units - where sales were stable compared to a year ago.
Terex Corp has also revised downwards its outlook for the year, saying that sales for the whole group were now likely to be 50% down on 2008 rather than 40-45% as previously announced. It said it was unlikely to be profitable in the second half of the year, with cost savings not sufficient to offset continued depressed demand for machines.
The company made a net loss of $77.6 million in the quarter on sales of $1.32 billion, down 55.0% from the same quarter in 2008.
"The turmoil from the ongoing recession continues to deeply impact sales for our industry," said Ron DeFeo, Terex chairman and chief executive officer. "Certain markets have stabilized, but at low levels, such as Aerial Work Platforms and Materials Processing. Other markets, such as Mining and large capacity cranes, have begun to weaken, but at less dramatic rates. We are responding by aggressively reducing costs.
Tom Riordan, Terex president and chief operating officer, said the company continued to manufacture on reduced schedules and on a build-to-order basis; "We anticipate that further cost savings initiatives will need to be undertaken in order to eliminate operating losses by the end of 2009 in our most challenged businesses. However, for our AWP business specifically, we may not see operating profitability until the demand environment improves, which in our estimate may not occur for another 12 months."
Mr Riordan said further restructuring and staff cuts would be required at the loss-making Construction division. It made an operating loss of $79.7 million on second quarter sales of $219.9 million, a fall of 68.2% on the same three months in 2008.
He said; "the environment remains challenging as dealers continue to be reluctant to invest in stock inventory for their dealerships and the tightness of commercially available credit continues to impact the ability to finance projects and equipment."