Sales fall at Manitowoc but order flow still positive

Second-quarter 2009 net sales in Manitowoc's crane segment were US$652.3 million, down 39% from $1.064 billion in the second quarter of 2008. Crane segment operating earnings for the second quarter of 2009 decreased 70% to $49.5 million from $167.0 million in the same period last year. Excluding the negative impact of foreign currency on the crane segment results, second-quarter sales and operating earnings were down 31% and 62%, respectively.

"Obviously, crane demand continues to be weak across most of our markets," said Glen Tellock, Manitowoc chairman and chief executive officer. "The exceptions include portions of Asia, Latin America, and Africa. We are also encouraged that overall new orders are continuing to exceed cancellations in terms of both unit and dollar volumes."

Crane segment backlog was $901 million at 30 June 2009, down 36% from $1.397 billion at 31 March 2009. Although the company has seen stabilisation in the form of net positive order flow, the magnitude of new orders is less than the quarterly shipments, the company said.

Sales for the overall Manitowoc Company were down 13.1% at $1.035 billion for the second quarter of 2009 from $1.191 billion in the same period 2008. The main reason given for this was the decline in crane sales.

The Manitowoc Company reported a net loss of $18.1 million for the quarter, versus net income of $133.9 million in the second quarter of 2008. The loss included unusual items totalling about $43 million on an after-tax basis

"I am generally pleased with the progress that we are making in managing through these difficult times," said Glen Tellock. "While we expect cyclicality in the crane business, the speed and severity of this downturn have been worse than we have seen in the past. We are adjusting our operations appropriately for the current economic realities in ways that should permanently strengthen the business. We have implemented specific actions that will eliminate approximately $365 million in cost out of our businesses annually, with approximately $240 million of those cost reductions to be realized this year.

"Although market conditions are difficult, we continue to generate positive cash flow and reduce debt. The reductions in our expense levels and working capital are enabling us to make progress toward our debt reduction goals."

Cash flow from operations in the second quarter of $16.3 million, together with proceeds from the sale of the Enodis ice machine business, enabled Manitowoc to reduce its total debt by around $161 million in the quarter. Given the company's normal second-half cash generation characteristics and its current outlook, Manitowoc reaffirmed its full-year debt reduction target of $450 million.