Terex sees increased operating profits despite first-quarter sales falling 5.3%
| April 25, 2013 |
In the first quarter of the year Terex saw net sales drop 5.3 percent from the same period last year to $1.7 billion. Nonetheless, the company saw an increase in operating profits.
After deducting operating costs, Terex profits were at $68.4 million the first quarter. That’s a 7 percent increase from the $63.8 million in operating profits the company saw in the same period last year.
Excluding the $3.4 million impact the company took after selling off its roadbuilding equipment assets to Fayat and a charge related to the company’s material handling business of $2.7 million, adjusted operating profit was $74.5 million. For comparison, when excluding the write down of an acquisition-related note receivable of $12.3 million, adjusted operating profits were approximately $76.1 million in the first quarter of 2012.
As far as outlook for the rest of the year goes, Terex says things are still in line with the outlook prior to this report. In a prepared statement, Terex CEO Ron DeFeo called the company’s performance in the first quarter of the year “mixed” noting that the company is encouraged by the performance of the Aerial Work Platforms business and the Cranes and Materials Processing divisions.
In an interview on the first-quarter report, DeFeo told CNBC “Well, we think a lot of room to improve is in front of us because of our own execution. And the mix of our business, really, helps us a lot,” DeFeo said. “We’re pretty broadly based. We have, you know, somewhere around 70 percent of our business outside the United States.
“But we also have a pretty big business in the United States. But by focusing on execution, pricing, cost control and, really, cash generation, it’s really made the difference for us and that’s our opportunity in the back half of the year as well.”
Where the company is seeing challenges are Construction and Material Handling & Port Solutions, DeFeo said. “Our Construction business is also reflecting the challenges of a less certain customer base in Europe. As a result, we are initiating additional actions in the second quarter to further adjust the cost structure of the MHPS and Construction organizations to better reflect the reduced demand for certain of their products,” he said.
In fact, the company is planning to incur restructuring charges of approximately $30 million to $50 million in the MHPS business during the second quarter. However, over the next one to two years, DeFeo says the company should be able to recoup some of that through what the company will be saving.