Terex Corporation recorded a net loss of USD103.1m in the third quarter, compared to a net income of USD93.8m in 2008. Net sales were down 51.2% from USD2.5bn to USD1.2bn.
In its cranes division, operating profit decreased USD73.5m from USD85.6m to USD12.1m, and gross profit declined from USD148.4m to USD70.8m. Net sales were down 38.3% year-on-year to USD454.6m. Rough terrain and tower crane sales were down on the level achieved in the third quarter of 2008, as were sales of lower capacity all terrain cranes. This, Terex said, was due to the continued decline in commercial construction and the soft demand from oil-related energy projects. Demand for higher capacity crawler and all terrain cranes remained buoyant as global infrastructure projects and energy-related projects, such as wind power and power plant construction, continued.
The same trends can be seen in the company’s backlogs, where reduced rough terrain and tower crane demand has had the most impact. Backlog in the cranes segment decreased 47.7% compared to 30 September 2008 and was 4.4% down on the level at the end of the second quarter 2009. Taking out the orders added through the addition of Fantuzzi and Noel Crane port businesses, backlog was down 59% year-on-year and 25% quarter-on-quarter.
Ron DeFeo, chairman and CEO, described the third quarter results as “disappointing”, but said there are signs that “we are turning the corner to better performance”.
“We have built a company that is both geographically and product diverse, but virtually no part of our business has weathered these market conditions unscathed,” said DeFeo.
“Fortunately, we see signs that certain markets have stabilised, and even a few signs that point to growth.”
Cost-cutting initiatives undertaken by the company have led to a USD265m quarterly run-rate spending reduction in the third quarter of 2009, compared to spending levels in the second quarter of 2008, as it targets a USD300m quarterly run-rate reduction by the end of 2009. Year-to-date, Terex has cash and cash equivalents of just over USD1bn compared to USD484.4m at 31 December, 2008. Over the course of the first nine months of the 2009 fiscal year, cash and cash equivalents have risen from USD484.4m to just over USD1bn. For the first nine months of 2008, cash and cash equivalents started the year at USD1.2bn and fell to USD484.4m.
“Our short-term cash management focus has led to inventory reductions that generated cash of approximately USD497m year-to-date, substantially delivering on our USD500m goal for the year in the first three quarters,” DeFeo said.
On the acquisition of the Fantuzzi and Noel Crane businesses, DeFeo said Terex expects their short-term results to be indicative of the “globally challenging environment for marine trade”. “Long-term, we expect that this will be a great business, with a leading position in the global port equipment industry.”
“We are at an inflection point in this business cycle and I believe it is now time to focus on growth while continuing to hold the line on costs,” said DeFeo.
“We have obviously taken a defensive posture to preserve the enterprise during this period of incredible economic uncertainty, but we believe progress can be made from here going forward.
“We recently held a North American dealer and customer event, and what we heard reinforces our views that the current business environment has stabilised and optimism is beginning to build for 2010 and 2011.”
