Terex Corp., Westport, Conn., announced a 2010 net income of $358.5 million, or $3.30 per share. The company, in what it terms the early stages of a business recovery, attributes the positive result to improved operating results versus 2009 and the gain associated with the previously disclosed divestiture of the mining business.
For the fourth quarter of 2010, Terex reported a net loss of $32.5 million, or $0.30 per share, compared to a net loss of $103.0 million, or $0.95 per share, for the fourth quarter of 2009. Net sales from continuing operations were $1,326.6 million in the fourth quarter of 2010, an increase of 31.2 percent from $1,011.4 million in the fourth quarter of 2009. Loss from operations was $0.5 million in the fourth quarter of 2010, an improvement of $74.8 million as compared to a loss from operations of $75.3 million in the fourth quarter of 2009.
For the full year 2010, the company reported a net loss from continuing operations of $215.5 million, or $1.98 per share, on net sales of $4,418.2 million, as compared to a net loss from continuing operations of $407.5 million, or $3.97 per share, on net sales of $3,858.4 million for the full year 2009. Net loss from continuing operations decreased by $192.0 million for the year ended December 31, 2010 versus the comparable period in 2009, primarily due to improved net sales volume, increased production activity, the effect of prior cost reductions and lower SG&A costs. Discontinued operations include the mining, Atlas, Powertrain and Load King businesses. All per-share amounts are on a fully diluted basis.
“For Terex, 2010 was clearly a transitional year as we rebounded from the trough levels of 2009 and completed the sale of our mining business,” said Ron DeFeo, Terex Chairman and CEO. “We have seen order rates accelerate throughout 2010 for most of our businesses, including a recent sequential upturn in order rates in our cranes segment as we secured several large contracts in the fourth quarter for longer-term delivery schedules.”
Markets in Latin America, India and China are driving large crane and off-highway truck equipment demand, said DeFeo. Markets such as the Americas and Western Europe have rebounded in demand for smaller equipment, especially aerial work platforms at home in the U.S., and compact construction equipment in Germany, central European countries and Latin America, he added.
“On the operations front, all of our segments increased net sales this past quarter on both a yearly and sequential basis, and three of our four segments had positive income from operations,” he reported. “With increases in backlog and order quotation activity, we are starting to see some positive operational catalysts. We have increased production across most of our segments and anticipate further increases throughout 2011 to match the anticipated heightened demand for our products.” Although costs associated with increased production will also rise, Terex anticipates net sales and income from operations will outpace production costs on a consolidated basis, Defeo said.
“An improving business environment does not come without challenges,” he continued, adding that the company continues to face competitive pricing, as well as increasing supply costs for components and raw materials. “In the face of these factors, we remain committed to our investments in critical improvement initiatives. Specifically, we will continue to implement changes driven by the Terex Business System, the framework around which we are building our capabilities as a superb operating company that we anticipate will deliver value in the coming years through improved capacity, response time, customer service and quality,” he commented.
Another key company initiative, DeFeo said, will be the continued roll-out of the Terex Management System, the company’s global enterprise resource planning system. “Approximately 19 percent of net sales are from businesses on the Terex Management System, and we anticipate this will increase to approximately 50 percent by 2012,” he said, citing improved information enhancing management decision making and customer responsiveness. “These initiatives, while clearly the right thing to do for the longer term, are a cost in the short term,” he added.
DeFeo said Terex expects improved demand in early-cycle product categories of AWPs and materials processing. “Our cranes segment is experiencing some short-term weakness, but the mobile-crane product offering has stabilized. Our port equipment business is showing increasing quotation activity; however, we still expect this business to report an operating loss in 2011. We continue to restructure this business and expect it to return to profitability in 2012. And while we expect cranes to be an improving story as we move through the year, many of our large crane orders, both in mobile cranes and port equipment, will not ship until the latter part of 2011.”
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