21.02.2017

Further declines at Terex Cranes

Terex has posted its preliminary full year results with further falls in revenues with substantial losses as the company restructures.

Full year revenues were down 19 percent to $1.27 billion, while last years' operating profit of $56.3 million was converted to a loss this year of $321.7 million due to substantial restructuring costs. The order book/backlog at the end of December was $323 million, down from $407 million at the end of 2015.

In the fourth quarter revenues fell 19 percent to $327 million, with an operating loss of $280 million, compared to a profit last year of $20.5 million. The company expects a further decline.

The slimmer Terex group as a whole saw full-year revenues fall 11.5 percent to $4.4 billion, with a pre-tax loss of $27 million, compared to a profit for 2015 of $195.7 million. Net debt was reduced by 73 percent to $1.09 billion.

Terex chief executive John Garrison said: “Our fourth quarter results were in line with our expectations and reflect the challenging global market conditions. We have taken significant steps to better position Terex for the future. We completed the sale of our MHPS business, initiated major restructuring actions within our Cranes segment, and dramatically improved our balance sheet. We continue to implement our strategy, to focus and simplify the company, and build capabilities in key commercial and operational areas.”

“Looking ahead to 2017, we expect our primary global markets to remain challenging. We anticipate lower fleet replacement demand from North American AWP rental customers. The global Crane market remains challenging and we expect a further decline in 2017. We anticipate modest growth in our Materials Processing business. Combined with our cost reduction actions and capital structure improvements, we expect to deliver 2017 earnings per share of between $0.60 and $0.80, excluding restructuring, impact from our ownership interest in Konecranes, and other unusual items, on net sales of approximately $3.9 billion.”

Vertikal Comment

The group is clearly focused on turning the crane business around, with substantial restructuring to reduce costs, improve initial reliability and introduce new products that are good from day one. The company expects to see further revenue declines in 2017, with crane sales dropping another 11 percent, while operating profits are likely to fall a further two percent.

The changes to the crane operation have come late, but are already making a difference, it is entirely possible that the business will bounce back stronger than expected towards the end of 2017. The company has a lot of work to do, but has a good deal of upside potential if it continues to make progress in product reliability and new product roll-outs.

The half year results will provide some strong indication on how well the substantial restructuring is going. The company may yet surprise its detractors this year.