Terex Corp. last week posted a $74.9 million loss in the first quarter of 2009, $0.79 per share, compared to net income of $163.3 million or $1.59 per share for the first quarter of 2008. Net sales were $1.3 billion in the first quarter of 2009, a decrease of 45 percent compared with $2.36 billion for the first quarter of 2008. Adjusting for foreign currency exchange rate changes, net sales declined 37 percent year over year.
Each of the company’s segments experienced lower net sales as the global economy continued its deterioration.
“The turmoil from the global credit crisis and economic slowdown has quickly and deeply impacted sales for our industry, with certain sectors down almost 75 percent from year-ago levels,” said Ron DeFeo, Terex chairman and CEO. “In response, we are aggressively reducing costs, with manufacturing spending in the first quarter of 2009 down 39 percent from the peak spending level in the second quarter of 2008, and down 16 percent sequentially, and selling, general and administrative spending, both excluding restructuring, down 26 percent and 14 percent, respectively for the same periods.”
The spending reduction for the quarter totaled $208 million, and, DeFeo said, Terex expects to reduce spending more than $300 million per quarter by the end of 2009.
“We continue to operate at reduced product levels, in many instances at levels well below our current demand, with a primary objective to reduce inventory where we saw progress in the quarter with a solid reduction in raw material deliveries,” added DeFeo. “The short-term goal is to focus on the loss-making businesses to achieve a breakeven or profitable level, while being cash-flow positive for the overall company, even at these trough levels.”
Tom Riordan, Terex president and chief operating officer said the company is operating with a “build-to-order” approach as it manages inventory levels. “All of our businesses are working closely with our suppliers to minimize raw material deliveries, which were reduced by over $90 million in the first quarter,” said Riordan. “We are working closely with our customers and dealers to confirm existing orders in an effort to minimize the level of inventory in the distribution channel. We believe this, along with aggressive actions with production scheduling, should generate significant cash flow from operations during the remainder of 2008.”
Terex has updated its expectations for 2009, currently expecting its 2009 net sales to decline in the range of 40 to 45 percent compared with 2008. Previous guidance was for 2009 net sales to decline in the range of 30 to 35 percent.
Aerial work platforms was a weak segment, with net sales decreasing 65.6 percent year over year to $228.5 million, compared to $664.7 million in the year-ago quarter. The company said rental customers are aging their fleets and deferring the purchase of new aerial and telehandler products. Terex said demand is stable for large booms in excess of 80 feet and very small aerials, but the core rental customer products of mid-sized booms, 40-to-60 feet, scissorlifts and telehandlers remained weak.
Net sales for the construction segment for the first quarter decreased $238.9 million or 47.7 percent to $261.7 million, down from $500.6 million in the year-ago quarter. Terex’ roadbuilding business is now part of the construction segment.
Net sales for the cranes segment decreased $187.5 million in the first quarter, or 28.9 percent, to $461.4 million, compared to $648.9 million for the same period in 2008.
For the materials processing and mining segment, net sales plunged $191.2 million or 33.9 percent year over year to $373.1 million.
Terex Corp. is based in Westport, Conn.