Terex Fourth Quarter, Full Year 2011 Results Released
Terex Corp., Westport, Conn., has reported is fourth quarter 2011 and full year 2011 results. As a result of investment sand improvements the company made in 2011, Ron DeFeo, Terex chairman and CEO, said that the company is on a course of improved profitability in 2012 and beyond.
“We have seen further recovery in many of our end markets as utilization rates improve and existing fleets age,” he said. This is consistent with an overall improving construction and economic environment. Emerging economies continue to grow most rapidly, along with solid performance in North America. This has helped offset some of the continuing weakness in several European markets.”
He added that cost reduction initiatives during 2010 and 2011 have resulted in an improved cost structure in 2012. “Given the severity of the economic crisis in 2009 and 2010 in our product categories, re-establishing base production levels and facility utilization rates were required to improve profitability,” he said. “Our ongoing goal is to establish a leaner, more customer responsive organization. These efforts have allowed us to improve output with a reduced manufacturing space of approximately 7 percent.”
Income from continuing operations were $38.8 million on net sales of $6.5 billion for the full year 2011, compared to full year 2010’s net loss of $215.5 million on net sales of $4.4 billion. The fourth quarter 2011’s continuing operations had a loss of $4 million, compared to a loss of $32.5 million in Q42010.
Net sales were $1,956.6 million in the fourth quarter of 2011 increased 47.5 percent from $1.33 billion in the fourth quarter of 2010. Excluding the impact of the acquisition of Demag Cranes AG, net sales increased approximately 20 percent from the comparable prior year period.
Income from operations was $3 million in the fourth quarter of 2011, an improvement of $32.5 million as compared with a loss from operations of $0.5 million in the fourth quarter of 2010.
Market Segments 2011 Results and Outlook
Terex reports is it seeing recovery in most of its end markets.
For aerial work platforms, more than half of the net sales in North America came from smaller, independent rental customers in the fourth quarter of 2011. The company expects margins to improve in 2012 as 2011 pricing actions take hold. The outlook for this segment is positive, with the North American rental channel in a full replacement cycle and in need of new equipment. Operating margin is expected to be in the 10 to 11 percent range for 2012, driven by price realization and productivity enhancements.
The cranes segment returned to profitability in 2011, and it is now being led by a new management team and a leaner organization. The company’s outlook on this segment reflects the slightly weakened demand environment for cranes in Europe, offset by anticipated continued growth in markets that are experiencing recovery, such as North America and Australia. Additionally, Terex expect that increasing demand from developing markets, such as Latin America and the Middle East, will continue. The combination of price increases implemented for 2012 and restructuring activities enacted in 2011 are anticipated to enhance overall profitability. Operating margins is expected to be in the 5 to 6 percent range on steady sales.Port equipment business began 2011 with significant losses but ended the year with a modest fourth quarter profit and a strong backlog for 2012. The material handling business (Demag Cranes AG) has performed as expected since our acquisition on August 16, 2011. With these segments, Terex expects improved sales, led by the services and the port solutions businesses, specifically in North America, India, and the Middle East. With the Domination and Profit and Loss Transfer Agreement yet to be effected for Demag Cranes, no integration benefits are included in the outlook. Operating margins are expected to be in the 4.5 to 5.5 percent range, including the impact of purchase accounting and corporate allocation adjustments, which are expected to comprise approximately $60 million of expense during 2012.
“Overall, our current outlook for net sales in 2012 is $7.5 to $8.0 billion, an increase of 15 to 20 percent from 2011, and approximately 5 percent, excluding the impact of 2011 acquisitions,” DeFeo said. “We expect income from operations to be $475 to $525 million. As a result, we would expect earnings per share (EPS) for 2012 to be approximately $1.65 to $1.85 per share for the year based on an average share count of approximately 116 million shares, excluding the impact of restructuring and unusual items.” The forecast assumes there is not a material worsening of the European debt crisis.
Fourth Quarter Performance Review
Aerial Work Platforms: Net sales for the AWP segment for the fourth quarter of 2011 increased $94.6 million, or 27.6 percent, to $437.4 million versus the fourth quarter of 2010. Rental utilization rates and rental rates achieved by customers continue to increase in most regions and have been particularly strong in North America. In addition, the company has seen increased volume from independent rental firms during the fourth quarter of 2011 and into 2012. Increases in fleet age have also led many rental companies to replace equipment in their fleets. The company also saw strong growth in Europe as rental companies continued to replace machinery when needed as their utilization has been good, and their rental rates have been increasing but at a slower rate than in North America.
Cranes: Net sales for the cranes segment for the fourth quarter of 2011 increased $44.6 million, or 8.1 percent, to $593.7 million versus the fourth quarter of 2010. Strong demand for rough-terrain cranes in North America continued, and the port equipment businesses net sales grew more than 50 percent from the prior year period. Additionally, the company experienced strong demand for its pick and carry crane product in Australia. Conversely, the company has seen reduced demand for crawler and all-terrain cranes in Europe.
Material Handling & Port Solutions: Net sales for the MHPS segment for the fourth quarter of 2011 were $361 million. Net sales were driven by machine sales for industrial cranes and mobile harbor cranes due to strong orders during earlier parts of 2011. Service and maintenance sales also contributed, as good capacity utilization at customer plants led to an increased need for services. Germany and the United States were the largest drivers of net sales in the quarter, but Brazil, India and China also demonstrated considerable strength.
For the complete report, visit http://www.terex.com/en/investor-relations/index.htm.