Equipment Type

Terex Sales Jump 35 Percent

Terex Corp. reported Q2 gross profit doubled and sales increased nearly 35.2 percent over 2011.

July 27, 2012

Terex Corp. reported Q2 gross profit doubled and sales increased nearly 35.2 percent over 2011.

Net sales were $2 billion in the second quarter of 2012, and gross profit was $429 million. Excluding the impact of the acquisition of Demag Cranes AG, net sales increased approximately 11% from the comparable prior year period.

“We had a strong second quarter,” said Ron DeFeo, Terex chairman/CEO. “This year’s focus has been to improve margins, generate cash and integrate Demag Cranes AG. We are on or ahead of expectations in these categories. Margin improvement resulted from better price realization and cost discipline.

“Our Aerial Work Platforms (AWP) and Cranes segments had strong performances and are well positioned for continued improvement in the second half of the year,” DeFeo said. “The Construction segment returned to profitability for the first time since 2008 and Materials Processing continued their positive trend. Overall, we believe the strength in our AWP and Cranes segments, as well as in North America and select other markets like Australia, will offset the weakness we expect to experience in certain markets during the second half of the year.

“In evaluating the second half outlook, we are encouraged by the balance in our business and despite concerns in Europe and foreign currency headwinds we expect to achieve earnings for the full year of $1.95 to $2.05 per share (based on an average share count of approximately 114 million shares and excluding the impact of restructuring and unusual items) on sales of $7.5 to $7.8 billion,” he said. “This outlook includes approximately $0.05 per share cost in the second half of 2012 for the guaranteed payment to the minority shareholders of Demag Cranes AG, pursuant to the Domination and Profit and Loss Transfer Agreement (DPLA).”

Terex Second Quarter Financial Performance

Terex Aerial Work Platforms:Net sales for the AWP segment for the second quarter of 2012 increased $120.0 million, or 24.7%, to $605.7 million versus the second quarter of 2011. The Company continued to see increased replacement-based demand in the North American rental channel for its aerial work platform products. The Australian market also continued to be a relatively strong contributor, due to natural resource based construction spending.

Income from operations in the second quarter of 2012 was $83.2 million, or 13.7% of net sales, as compared to income from operations of $27.4 million, or 5.6% of net sales, during the second quarter of 2011. Income from operations benefited primarily from improved price realization and greater manufacturing productivity due to higher volumes, partially offset by higher input costs.

Terex Construction:Net sales for the Construction segment for the second quarter of 2012 increased $29.1 million, or 8.1%, to $388.8 million versus the second quarter of 2011. Adjusting for the translation effect of foreign currency exchange rates, net sales increased approximately 14% from the comparable prior year period. Compact construction equipment as well as truck and component sales in developing markets, particularly Russia, China and Latin America were significant contributors to the year-over-year increase in sales. The Company continued to see weakness in demand for roadbuilding equipment.

Income from operations in the second quarter of 2012 was $9.6 million, or 2.5% of net sales, as compared to a loss from operations of $6.0 million, or 1.7% of net sales, during the second quarter of 2011. Operating results benefited from improved price realization as well as cost savings initiatives taken in 2011. These were partially offset by an unfavorable product mix.

Terex Cranes:Net sales for the Cranes segment for the second quarter of 2012 increased $20.1 million, or 4.3%, to $484.2 million versus the second quarter of 2011. Adjusting for the translation effect of foreign currency exchange rates, net sales increased approximately 12% from the comparable prior year period. Strong demand for rough terrain cranes and improving demand for all terrain cranes continued in North America, the Middle East and Latin America, as well as general strength in Australia.

Income from operations in the second quarter of 2012 was $43.5 million, or 9.0% of net sales, as compared with a loss from operations of $34.0 million, or 7.3% of net sales, during the second quarter of 2011. Operating results benefited from improved price realization and cost reduction actions implemented in the prior year. The 2011 results included charges of approximately $36 million in restructuring and related charges.

Effective July 1, 2012, the port equipment business currently reported as part of the Cranes segment will be consolidated within the MHPS segment. Excluding the port equipment business results, the operating margin for the Cranes segment would have been approximately 11% in the second quarter of 2012.

Terex Material Handling & Port Solutions:Net sales for the MHPS segment for the second quarter of 2012 were $361.0 million. Net sales are generally on track for port equipment and services, but are somewhat behind expectations in the industrial cranes business. Net sales generated by the segment’s service component was particularly strong in North America.

Income from operations was $11.8 million in the second quarter of 2012. Operating results improved by $8.9 million compared to the first quarter of 2012 primarily due to product mix and reduced spending levels.

Terex Materials Processing:Net sales for the MP segment for the second quarter of 2012 increased $1.6 million, or 0.8%, to $190.3 million versus the second quarter of 2011. Adjusting for the translation effect of foreign currency exchange rates, net sales increased approximately 4% from the comparable prior year period. Continued strength in North America and Australia were the primary sales drivers, partially offset by softening demand in Western European markets, particularly for mobile crushing and screening equipment.

Income from operations in the second quarter of 2012 was $28.6 million, or 15.0% of net sales, compared to income from operations of $21.1 million, or 11.2% of net sales, during the second quarter of 2011. Operating performance improved primarily due to pricing, cost savings and the reimplementation of manufacturing at the Coalville location, allowing the business to release a restructuring reserve of $2.4 million.

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