Challenging second quarter for JLG

Oshkosh Corporation’s access equipment segment JLG saw sales decline 23.2% to $754.3 million for the second quarter of its 2016 financial year, compared to the same period in 2015.

The decline in sales was primarily due to the slowdown in North American replacement demand that began in the third quarter last year and lower shipments of telehandlers in the continent, said the company. The dip follows a large increase in telehandler sales in the second quarter of the 2015 financial year, due to the transition to Tier 4 engines.

JLG’s operating income decreased 44.7% to $75.7 million, or 10% of sales, in the second quarter compared to $136.9 million, or 13.9% of sales, in the previous second quarter.

“The decrease in operating income was primarily the result of the lower sales volume and a challenging pricing environment, the impact of a prior year benefit associated with a favourable vendor recovery settlement and adverse manufacturing absorption as the business significantly reduced production rates, offset in part by lower spending on engine emissions standards changes,” said the company in its statement.

Wilson Jones, Oshkosh president and CEO, said the results in the access segment had been better than expected. “Our North American access equipment rental customers, as expected, adopted a more cautious approach to rental fleet capital expenditures during the quarter. However, we believe rental company market conditions continue to support a reasonable level of fleet investment.

Mr Jones added, “We believe a generally more positive view on the US economy, a solid construction outlook and a relatively mild winter in the US led some rental companies to make access equipment purchase decisions earlier in the year than they may have previously planned, leading to higher than expected sales in the access equipment segment in the second quarter."

Group's second quarter consolidated net sales stood at $1.52 billion, a decrease of 1.9% on the same quarter in the previous fiscal year. It said higher sales in the defence, fire & emergency and commercial segments almost completely offset a decline in sales in the access equipment segment.

Consolidated operating income was $91.4 million, or 6% of sales, for the quarter, compared to $109.7 million, or 7.1% of sales. “The decline in operating income was driven by lower access equipment segment sales and higher corporate expenses, offset in part by improved performance in the defence segment,” said the company.