Tough third quarter for JLG
By Euan Youdale30 July 2015
Sales declined 10.3% to US$932.6 million in the third quarter of JLG’s 2015 financial year, compared to same period last year. Its parent company Oshkosh Corporation said a slowdown in the order rate in North America was the primary driver, along with, to a lesser extent, delays in new product launches.
The strengthening US dollar also hit Oshkosh’s access equipment segment sales by $33.4 million; On a constant currency basis, sales decreased 7%. JLG’s operating income also dropped 18.2% to $136.4 million, or 14.6% of sales, for the third quarter, compared to $166.8 million, or 16% of sales, in the same period for 2014.
Charles Szews, Oshkosh Corporation’s chief executive officer, commented, “Our access equipment segment sales fell short of our expectations for the third quarter, normally our seasonally best quarter, due to heavy rains in May disrupting construction projects across the southern US, cautious order patterns arising from uncertain rental market conditions, including the impact of lower oil and gas prices on rental demand for access equipment, and to a much lesser extent, delays with several new product launches. While these launch issues are largely behind us, they impacted our sales and manufacturing costs in the quarter.”
Mr Szews added, “We believe the fundamental drivers for access equipment demand remain solid. Specifically, we believe slowly rising residential and non-residential construction in the US will continue to drive rental fleet demand for access equipment, and that rental company metrics will remain strong.
“Further, we now expect an approximate 5% - 10% sales decline in our access equipment segment in fiscal 2016 as we do not expect improving construction demand to fully offset anticipated reduced replacement demand resulting from very low industry purchases during 2009 and 2010.”
As a result the company has reduced its full year expectations for adjusted earnings per share to a range of $3.00 to $3.25. “While we are adjusting our access equipment segment expectations, we are confident in the overall strength of our business and expect improved financial performance in fiscal 2016 led by a strong recovery in our defence segment,” said Mr Szews.
Group third quarter net income stood at $89.9 million, compared to $105.1 million, in the third quarter of fiscal 2014. As expected, third quarter results were positively impacted by $0.09 per share, it said.
Consolidated net sales for the group were $1.61 billion, a decrease of 16.6%, compared to the previous third quarter. Significantly lower defence segment sales, as expected, as well as fewer access sales contributed. On a constant currency basis, sales decreased 14.7%.
Consolidated operating income was $136.6 million compared to $174.3 million in the third quarter of 2014. Adjusted consolidated operating income was $175.3 million.
“Our other segments met our expectations in the third quarter. In particular, our commercial and fire & emergency segments performed well in the quarter with each reporting higher revenue, operating income and backlog,” added Mr Szews.