Terex also reported a record operating profit margin of 12.1%. “The margin expansion was the result of increasing international business, favorable product mix in certain businesses, the positive impact of pricing and internal initiatives,” said Terex chairman and CEO Ron de Feo.
Net sales in the Terex Cranes segment for the second quarter of 2007 increased $103.9 million, or 23.6%, to $544.5 million from $440.6 million in the second quarter of 2006, reflecting improvement in all product categories, as well as the favorable impact of currency exchange rates, the company said. Excluding the impact of currency exchange rates, net sales grew approximately 19%. Sales, general and administration expenses increased in the second quarter of 2007 to $46.2 million, or 8.5% of net sales, a higher proportion than last year. This was mainly due to increased investment in sales and administrative infrastructure to support the volume levels, a $4.5 million increase in the corporate expense allocation, and the impact of currency exchange rates. Income from operations was positively impacted by higher sales volume and the impact of prior pricing actions, increasing $19.9 million to $56.8 million, or 10.4% of sales, for the second quarter of 2007, from $36.9 million, or 8.4% of sales, for the second quarter of 2006.
“The Terex Cranes segment continued to demonstrate significant growth in both sales and profitability,” said Terex Cranes president Steve Filipov. “The global market for cranes continues to be outstanding, and our manufacturing locations are making real improvements in our ability to increase throughput. Also leading to increased sales is a shift to larger cranes, such as our large crawler cranes from Germany and rough terrain cranes in North America, as well as the favorable impact of pricing. That said, global demand for our products continues to outpace supply, as evidenced by our record backlog.”
Filipov continued, “Our challenge is meeting this demand. Our factory performance continues to improve, but the unprecedented demand for cranes continues to stress our supply chain and our internal operations, such as welding capacity. As we previously mentioned, we will address the limited supply of certain components and production bottlenecks through improved coordination with our suppliers and implementation of lean principles to better utilize our manufacturing footprint. It is difficult to gauge the timing on these productivity improvement initiatives, but we certainly believe there is room for significant financial improvement.”
Terex Cranes TC 40L truck crane Terex Cranes TC 40L truck crane