07.11.2014

Profits and orders decline at Palfinger

Palfinger has reported its third quarter results, which show increased revenues, but lower profits, while the company has warned about a substantial drop in order intake.

Total revenues for the first nine months were up 11 percent to €795.1 million, largely driven by higher crane sales in Europe. Pre-tax profits for the nine months remained slightly ahead of last year at €47.9 million – 3.5 percent higher than in 2013.

Revenues in the third quarter continued to grow reaching €255 million, up almost six percent on last year, however pre-tax profits dropped 13 percent to €12.3 million, while order intake slowed in July and August and then in the company’s own words “nosedived” in September.

The company says that crane sales improved in Switzerland, Sweden, Great Britain, Ireland, Belgium and the Netherlands, but declined in Denmark, Turkey, Africa and Australia. Interestingly it also noted that the Spanish market posted some modest growth for the first time in several years.

North American sales were reported to be “satisfactory”, Russia as stable – thanks to the company’s local investments, while South America and Middle East both declined. In Asia it experienced strong growth due mainly to the development of the Chinese market and the success achieved by its joint venture with Sany.

While Palfinger does not disclose its Access Platform revenues or margins, it did say: “Revenue in the access platform business unit was kept at a level comparable to that of the same period last year. Product introduction of a new large platform – the P480 - has been progressing well, primarily in North America and China. The compact class models distributed by the joint venture in Italy are also showing excellent sales development.”

Vertikal Comment

This is a real mixed bag from Palfinger, although in essence the company continues to do well and still expects to reach the billion Euros of revenue this year but warns that profits will be below its original forecasts. The company has a lot a going on and has increased its debt by almost 50 percent to invest in a large number of Russian ventures, as well as the Sany joint ventures and its stake in Hidro Grubert in Argentina.

It is clear that the sudden drop in order intake for cranes in Europe has spooked the management as it was clearly not anticipated. As a result it is sensibly lowering the expectations of its shareholders. While the next quarter or two might be shaky, the company remains well placed to continue its progress in 2015 and is as well placed as any company in its sector. As long as the world does not slide back into a global recession it should still post a respectable result for 2014 and have an even better year in 2015.

Hydro