Despite growth in AWP and cranes, Terex cuts outlook after 2Q operating income falls 51%
| July 29, 2013 |
Citing a “softened” marketplace compared to what the company originally expected for 2013, Terex Corporation announced year-over-year declines in both net sales and operating income for the second quarter and has cut its outlook for the rest of the year.
Net sales for the equipment maker were $1.9 billion in the second quarter, down 5.1 percent from the second quarter of 2012. Meanwhile, operating income plummeted 51 percent in the last year, from $175 million to $85.3 million. Terex said the main reason for the decline was $65 million in restructuring charges during the quarter.
“The second quarter results reflect this lighter order environment overall, as our Cranes, Construction and Material Handling & Port Solutions (MHPS) segments all experienced lower revenues than originally expected,” said Ron DeFeo, Terex Chairman and Chief Executive Officer, in a prepared statement.
“However, we do continue to see strong performance from our Aerial Work Platforms (AWP) business, and good operational execution by our Materials Processing business in a challenging environment.”
As DeFeo noted, Terex’s AWP division was certainly the company’s bright spot for the quarter with a 17 percent year-over-year sales jump to $607 million. AWP operating income rose 30 percent to $101 million.
The Cranes division reported growth over the past year as well with revenues rising 3 percent to $521 million. However, operating income for the division fell 54 percent to $23 million.
Meanwhile, the company’s Construction division reported the largest drop in revenues at a 30-percent fall from last year. Construction revenues were $275 million while operating income fell 50 percent to $5 million.
The Materials Processing (MP) division and Material Handling and Port Solutions (MHPS) divisions also reported losses. MP saw a 7-percent drop in sales to $176 million, along with a 14 percent drop in operating income to $25 million. MHPS sales dropped 16 percent t0 $370 million, while last year’s $11 million in operating income tumbled into an operating loss of $57 million for the second quarter.
“We expect stronger MHPS performance in the second half of 2013 as we begin to deliver increased revenue from their large backlog,” DeFeo said.
Looking forward, Terex has cut its total sales outlook for the remainder of the year from its previous estimate of between $7.9 billion and $8.3 billion to $ 7.5 billion and $ 7.7 billion.
“Overall by geography, North America continues to improve, but now at a slower pace. Europe remains challenging, particularly for our Cranes, Construction and MHPS segments, and the markets in the rest of the world remain mixed,” DeFeo said.