Terex feels margin pressure

Terex’s revenues for the third quarter of the year were up +3% to US$ 1.81 billion, compared to the same period last year. However, its net profit from continuing operations was down -31% to US$ 58.7 million.

Terex chairman & CEO Ron DeFeo said, “Our results for the third quarter were in line with the revised guidance communicated in mid-September. Our Cranes segment met our lowered expectations for the quarter as end markets remain challenged. However, despite continued market environment challenges, we are anticipating sequential improvement from Cranes in the fourth quarter.

“While our AWP business is performing well, we had planned for a stronger second half of 2014 than has materialised which has put pressure on margins. AWP profitability was further negatively affected by currency movements late in the quarter, primarily the Brazilian Real, higher commodity costs and continued manufacturing start-up costs related to the production of telehandlers at our Oklahoma City facility.”

In terms of revenue growth, Terex AWP, which makes products under the Genie brand, was the company’s best performing division in the third quarter. Sales were up +12% to US$ 599 million, although operating revenues fell -15% to US$ 68.4 million. However, with an operating margin of 11.4%, it remains Terex’s most profitable business.

The only division to see a fall in sales was Terex Cranes, where revenues were down -7% to US$ 420 million. Operating income came in at US$ 21.8 million, a -25% fall compared to a year ago.

Of the other divisions, Terex Construction saw revenues rise +10% to US$ 207 million, the Materials Processing equipment business was up +5% to US$ 156 million, and revenues for Materials Handling & Port Solutions rose +2% to US$ 468 million.

Terex added that its overall backlog of orders was +22.5% higher than a year ago at US$ 2.2 billion. Having said that, the company was cautious about its outlook.

“Predicting market improvements has been challenging and in the near term we will be assuming flat markets and only performance improvements that we can control,” Mr DeFeo added. “Consequently, we now expect our annual outlook for earnings per share to be at or near the bottom of our previously announced range of $2.35 to $2.50, excluding restructuring and other unusual items, on net sales of between $7.3 billion and $7.5 billion.”