Record revenues for Manitowoc and debt reduction on target

Manitowoc Crane Group has reported a 45% rise in net sales on continuing activities to $985.14 million for 2003, up from $681.0 million in 2002. The increase was primarily due to the addition of Grove, acquired in 1002 and included for just five months during that year. Grove Crane contributed more than half of the crane group's sales revenue in 2003.

Stripping out business that have been closed or sold, operating profit for the year was $34.2 million, down from $62.9 million in 2002.

Parent company Manitowoc Company Inc had net sales of $1.59 billion, increasing 17% from $1.36 billion last year. Including special items, the company reported net profits of $3.5 million, compared with a loss of $20.5 million in 2002. Excluding special items (one-off reorganisational costs), earnings for 2003 were $20.7 million.

A series of major acquisitions in recent years, including Grove and Potain in the crane segment, have left Manitowoc with significant debts. It paid $57m in interest expenses in 2003, up from $52m in 2002, and net payments on long-term of borrowings amounted to $108m in 2003, up from $63m in 2002. But Terry Growcock, group chairman and chief executive officer, said that debt was being paid off quicker than planned. He said that "an unyielding focus on cash generation in all three of our segments enabled us to generate $151 million in cash from operations and reduce our net debt by $126 million ($109 million reduction of debt and $17 million increase in cash) before the effect of currency translation. Both of these measures were substantially ahead of our targets of $100 million and $60 million, respectively." This reduced the company's net debt-to-capital ratio (gearing) to 65%, down from 68% at the end of 2002. Excluding the impact of the fall in the dollar against the Euro, the company's gearing would have dropped to 63%.

In the fourth quarter of the year, net sales in the crane segment were $254.7 million, up 16% from $218.7 million in 2002. Operating earnings were $6.0 million compared with $7.8 million one year ago.

At 31 December 2003 total crane backlog was $220.7 million.

Growcock said: "While demand for US crawler cranes is not rebounding, we are seeing increased activity internationally, especially in Asia and in certain parts of Europe. Our recent acquisitions of Grove and Potain have positioned us to capitalise on these opportunities and to pursue new markets around the world." Growock said that nearly 70% of Manitowoc's 2003 crane sales came from international markets. In 2002 that figure was 45%.

He added: "While we expect weak demand for US crawler cranes to continue well into 2004, we are beginning to see other signs of an upturn in the economy. Although the landscape remains very competitive, international demand for crawler, tower, and mobile telescopic cranes is improving." Glen Tellock, president of Manitowoc Crane Group, said that the North American market for crawler cranes fell 60% in 2003 ­ much further than the company's projections of 25%. The tower crane market worldwide was down about 8%, he said. "This is probably the worst lift market in 20 years but take away all the things that we did to make us a better segment, and you'll see that Manitowoc Crane Group was still a profitable business." The National Crane factory in Nebraska rolled out its last machine in December 2003 before closing down. Boom truck production/assembly now takes place at the Grove Crane factory in Shady Grove, Pennsylvania. Tellock ruled out the prospect of closing down the lattice boom crane factory in Manitowoc, Wisconsin and moving that to Shady Grove too, because "the manufacturing core competencies at Shady Grove are not the same as at Manitowoc."