Buying Euros to hedge against currency fluctuations in advance of its Demag acquisition has banked Terex an extra $5.5m, which helped dilute the $28m cost or restructuring in the second quarter.
Terex Corporation reported net income for the second quarter of 2002 of $5.2m, compared to net income of $12.0m for the second quarter of 2001.
Net sales for the three months to 30 June 2002 (excluding special items) rose 53% to $690.2m on the back of several acquisitions.. Included this time were CMI, Atlas, Schaeff, Pacific Utility, Telelect Southeast and Advance Mixer. Excluding the impact of acquisitions, net sales increased 8% in the second quarter of 2002 compared to the second quarter of 2001.
Sales in Terex’s North American mobile telescopic crane business declined compared to the second quarter of 2001. The lattice boom crane and boom truck businesses continue to grow, ‘as we believe we are taking market share from our competition’, said the company.
Excluding the impact of restructuring and other special items, income for the second quarter of 2002 was $20.5m, compared to $14.2m for the second quarter of 2001.
Special items in the second quarter of 2002 relate primarily to the previously announced restructuring charge for the closure of the Terex Mining manufacturing facility in Tulsa, Oklahoma and the write down of certain assets within the light construction group, European lifting group and EarthKing subsidiary.
‘After the first six months, I remain cautiously optimistic about 2002,’ said Terex chairman and CEO Ron DeFeo. ‘I believe we have reached the bottom of the trough, but it is still difficult in the short term to predict the timing of any recovery. I continue to believe that we are a stronger company today than one year ago.’
DeFeo said: ‘During the first six months we have continued to grow the Terex franchise, both through acquisitions and by focusing and executing on our low cost manufacturing and low SG&A business model. We were able to grow our base business 8% during the quarter, as compared to the second quarter in 2001, and although our operating margins are down from the prior year, they have increased over two percentage points from the first quarter of 2002, giving me confidence that the worst may be behind us. Our recently completed acquisitions are generally on track and were accretive to earnings in the second quarter. We also generated $23m in cash from operations and successfully accessed the capital markets during the past quarter, thereby improving the overall capital structure of the company.’
He continued: ‘All of these actions together enabled Terex to remain aggressive and opportunistic on acquisitions, taking advantage of market conditions and positioning Terex for continued growth in the future. Our most recent announcements regarding our planned Demag and Genie acquisitions are good examples of this. As we continue to operate in this difficult business environment, we cannot control the end markets and the timing of any recovery, but we can continue to execute on our business model, grow the Terex franchise and continue to look for ways to differentiate ourselves from our competition and create shareholder value.’
Terex’s net debt stood at $817.0m on 30 June, down from $922.3m three months earlier, primarily reflecting the impact of the April secondary offering of 5.3m shares of common stock, which raised $113m. Net debt to book capitalisation at the end of the second quarter was 53.4%, compared to 57.5% at the turn of the year.
