Terex on course as aerials lead growth

Terex Corp said it was on course to reach its target operating profits of $475 to $525 million for the full year as it reported like-for-like first quarter sales up 16% and operating profits of $63.8 million compared to losses of $9.3 million in the same period in 2011,

Sales for the quarter, including the recently acquired Demag Cranes AG business, were $1819 million, an increase of 44.8% compared to Q1 2011.

The best performing division was Aerial Work Platforms - which includes the Genie business - with operating profits of $42.6 million and revenue growth of 35.7%. Terex AWP represented 28% of total group sales but contributed 66% of operating profits in the quarter.

None of the group's five divisions made operating losses, although the Construction business was break-even, adversely impacted by low government infrastructure spending in North America and Brazil.

"We are pleased that 2012 is developing as planned," said Ron DeFeo, Terex chairman and CEO. "While we still have a significant amount of work ahead of us, we have taken a solid step towards our margin expansion and cash flow objectives for the year."

Mr. DeFeo said North America had been a strong market for most product categories, except Roadbuilding products, and that Terex continued to be cautious about European markets, which it said was weak in some areas and strong in others.

"We believe the global business environment continues to support growth and increased equipment sales. Although the Chinese market has softened somewhat, this was not unexpected and was built into our expectations for the year", said Mr De Feo.

Sales for the AWP business increased by 35.7% to $513.4 million compared to the first quarter of 2011, with recovery in the North American rental markets continuing to strengthen and strong growth also in Australia. The division made operating profits of $42.6 million, compared to $5.7 million for the same period the previous year.

The order backlog at the division rose by 3% to $673 million from the end of 2011, and is 51% higher than 12 months ago.

At the previously loss-making loss-making Terex Construction division, sales increased 6.3% to $363.1 million, with truck and component part sales to developing markets in Russia, Africa and China responsible for the increase. The division operated at break-even, compared to a $3.2 million operating loss in the first quarter of 2011.

Terex said the profitability of the division was impacted by losses in the roadbuilding segment, which Terex said was being hampered by the lack of government infrastructure spending in North America and Brazil.

Sales at Terex Cranes increased by 5.3% to $419.4 million compared to the same period last year. Operating profits were $7.3 million, up from a $22.5 million loss last year. Terex said it was seeing strong demand in North America, primarily for rough terrain cranes, as well as god demand for its pick and carry cranes in Australia and certain port equipment products.

Crawler crane sales remained soft in Europe as austerity measures have impacted large construction and power projects that typically use this type of product.

The Terex Material Handling & Port Solutions division, which includes the new Demag Cranes business, reported sales of $367.5 million and operating profits of $2.9 million. Sales were driven by demand for industrial cranes, primarily process cranes and handling technology, and mobile harbour cranes, with customers in Germany and the US being the main drivers of sales, followed by India and China.

The Materials Processing business saw sales up by 11.2% to $169.2 million, with strength in North America being the primary driver of sales increases. Demand in Western European markets remained soft. Increased mining and construction activity continued to drive demand for mobile crushing and screening equipment in Australian and Asia Pacific markets.

The division made operating profits of $15.3 million, up from $12.3 million during the first quarter of 2011.