Tough quarter for Terex/Genie
Terex and Genie have reported a fall in third quarter revenues, profits and order intake.
Genie sales revenues for the first nine months of the year were $2.23 billion, a fall of just over four percent on the same period last year. Operating profit dropped 27 percent to 191.8 million.
Moving to the third quarter total sales were $628.2 million, 14 percent lower than this time last year, partly due to currency exchange factors. Order intake for the period was $367 million, leaving the order book/ backlog at $494 million, six percent down on this point last year. Operating profit slumped 44 percent to $45.9 million.
Genie president Matt Fearon said: “At every point in the equipment cycle, our global teams focus on meeting the needs of our customers. While we are taking steps to align production levels and cost structure with the current environment, we will continue to invest in product development, innovation and technology that enhances our value proposition with our customers.”
“I am encouraged by our performance in China where growth continues to be driven by customers adopting our advanced products, and we are excited about our long term growth prospects across the Asia Pacific region.”
“The Terex Utilities team continues to execute well in a more stable market environment, and the new, state of the art manufacturing facility that we are building in Watertown, South Dakota, remains on schedule.”
Terex - including Cranes
Terex as a whole, reported total revenues for the nine months of €3.47 billion, roughly the same as last year on a ‘like for like’ basis. This includes Genie, Powerscreen materials processing and the Terex tower and Rough Terrain crane business which appears to be included in corporate costs. Pre-tax profits were 13 percent lower at $245 million.
In the third quarter, revenues were just over a $1 billion down seven percent on this time last year, while pre-tax profits were 19 percent lower at 67.9 million.
Terex chief John Garrison said: “It has become clear that we are in a softening environment for industrial equipment. Demand in the major markets for Aerial Work Platforms has declined, putting pressure on sales. We reduced AWP production in the third quarter and have made further reductions in the fourth quarter to align with the market which is impacting margins. Materials Processing continued its strong performance in the quarter, however bookings and backlog levels are also pointing to weaker demand in their global markets.”
“I was pleased with our cash generation performance in the third quarter, as we achieved $104 million of free cash flow, representing a significant improvement compared to last year. As we enter a more challenging macro environment for industrial equipment we are intensely focused on generating cash and maintaining a strong liquidity profile. We are well positioned, entering the fourth quarter with approximately $1.1 billion in available liquidity.”
“Looking ahead to 2020, we are operationally planning for sales to be approximately 10 percent lower than 2019 due to the softening macro environment for industrial equipment. Our global team continues to focus on creating a ‘Zero Harm’ safety culture, delivering value to our customers and implementing our strategy."
The softer results from Genie are no great surprise. The North American market is suffering a little due to rental companies holding off on their capital investment programmes while they try and gauge the effects of the threatening economic indicators which suggest an impending slowdown leading to a softening in demand. This trend has been highlighted in several sets of results that we have seen so far, particularly from North American manufacturers, which are struggling in some markets due to the US government’s trade practices, tariffs and trade sanctions.
Both Genie and Terex Cranes have a good number of attractive new products coming through, which will inevitably help maintain sales in a tougher market. While 2020 is likely to be challenging, the company is more than strong enough to weather the storm and continue to make progress on its medium to long term strategy.
Not a great set of numbers, but not catastrophic either.