Terex Cranes returns to profitability

Despite this fall, the crane division generated $14.5m profit, compared to the $12.8m loss witnessed in Q2 2016.

Over the first half of the year, Terex Crane sales revenue stood at $567.7m, $97m less than the corresponding period in 2016.

Order backlog in the second quarter grew 29% year-on-year and bookings 26%.

During the financial results conference call, transcribed by Seeking Alpha, John Garrison, Terex president and CEO, said: “In terms of sustainability of the backlog, we are pleased by the bookings and backlog. I would say that the markets on Cranes remain challenging but they are clearly stabilizing and we're seeing that stabilization pretty much across the globe.”

Garrison said sales fell in Europe, principally driven by the lower demand for crawler cranes in Germany due to regulatory changes in the energy market.

“In North America the market is stabilizing, it's not robust by any stretch of imagination, but it has stabilized, we think stabilization on the oil side of the businesses is helping us there. And then again markets like Australia, which in my opening comments, I said we haven't really seen any volumes since 2014, we're beginning to see not only volume for imports, specifically our German cranes produced, our Demag line, but also seeing our pick and carry line pick up,” he added.

Garrison said a lot of Demag all-terrains are sold in Middle East, and that there has been growth in orders for tower cranes in UK and North America.

As a reason behind the return to profitability, he cited the execution of the restructuring program.

“In Q2 we did close the Jinan manufacturing site in China, and we're beginning to see the benefits of the closed plants from previous Waverley, Waukesha, and exiting Aerials business in Brazil,” said Garrison.

In Germany, the company has signed an agreement to sell its cranes manufacturing location in Bierbach. Terex has reached an agreement with the Works Council to proceed with its footprint rationalization and cost reduction plans.

An element of the Bierbach sale is an agreement for Terex to utilize the testing platform where it currently tests its largest AC and crawler cranes.

“As a result of the progress in the Cranes restricting program, stabilizing markets and our improved order book, we are increasing full year guidance. We now anticipate sales to be down about 6% with an operating loss of approximately 1%,” said Garrison.