Backed by a 57% increase in the group’s order book from $1.12bn to $1.761bn compared to the same period last year, Terex’s Q2 net sales of $1.488bn have encouraged a more optimistic forecast than previously predicted.
The company reported an operating loss of $2m in the first half. Adjusting for $4m of losses related to customer insolvency, and $37m relating to restructuring, the company says it would have been able to report operating income of $39m for the half. Terex says it is still on track to meet its 2013 target for net sales of $8bn.
Terex failed to hit targets for operating margin for the quarter, attributing this to higher than expected input costs, driven up by supply shortages and productivity deficiencies within certain departments. The company says that the supply chain is recovering from the turmoil caused by the global financial crisis, with delays and disruption slowing or mitigated.
Restructuring and cost reduction activity within Terex Cranes contributed significantly to missing the target, as well as funds set aside to boost the financing capability of Terex Financial Services division.
Terex CEO Ron DeFeo said: “In general, this is not the quarter I was hoping for in terms of bottom line performances. Nevertheless, the quarter reflects real progress, an adjusted net income of $0.10 per share, some tough restructuring choices that we’ve made and recognition of the challenges that we face and the issues that we believe we’re fixing.
Q2 net sales for Terex Cranes showed a 33% increase in order backlog for the segment along with a 3% increase in net sales over 2010, while operating profits dropped by 3%.
The results announcement also provided an update on Terex Corporation’s merger with Demag Cranes AG, stating that they now own or have an agreement to buy 82% of the German company. Terex expects the deal to complete by the third quarter of 2011, pending EU approval.
