JLG, the access equipment segment of Oshkosh Corp., declined 10.3 percent to $932.6 in revenue for its fiscal third quarter, compared to the same period a year ago. A slowdown in the order rate in North America was the primary driver of lower shipments along with, to a lesser extent, delays in new product launches.
The strengthening U.S. dollar also negatively impacted access equipment segment sales by $33.4 million. On a constant currency basis, the sales decrease was only 7 percent.
Access equipment segment operating income slid 18.2 percent to $136.4 million, or 14.6 percent of sales, for the fiscal third quarter, primarily as a result of lower sales volume, as well as unfavorable currency impacts of $6.9 million and production inefficiencies related to challenges with several new product launches.
“Our access equipment segment sales fell short of our expectations for the third quarter, normally our seasonally best quarter, due to heavy rains in May disrupting construction projects across the Southern U.S., cautious order patterns arising from uncertain rental market conditions, including the impact of lower oil and gas prices on rental demand for access equipment,” said Charles Szews, Oshkosh Corp. CEO. “And to a much lesser extent, delays with several new product launches. While these launch issues are largely behind us, they impacted our sales and manufacturing costs in the quarter.
“We believe the fundamental drivers for access equipment demand remain solid. Specifically, we believe slowly rising residential and non-residential construction in the U.S. will continue to drive rental fleet demand for access equipment, and that rental company metrics will remain strong. However, we now believe that a shortened construction season in the U.S. due to severe weather over the last two quarters along with the impact of lower oil and gas prices on rental fleet utilization are leading U.S. rental companies to reduce access equipment purchases compared to our earlier expectations for fiscal 2015.”
Szews said the company now expects a decline of about 5 to 10 percent in the access equipment segment in fiscal 2016.
“We do not expect improving construction demand to fully offset anticipated reduced replacement demand resulting from very low industry purchases during 2009 and 2010.”
JLG Industries is based in McConnellsburg, Pa. Oshkosh Corp. is headquartered in Oshkosh, Wis.