OshKosh's military business is rebounding

Oshkosh Corporation revenues fell more than a third in the fourth quarter, with net income dropping from USD77.8 million to USD50.3 million.

Results for the fourth quarter of fiscal 2015 were adversely impacted by a combined USD2.4 million after-tax workforce reduction charge in the access equipment segment and corporate.

Consolidated net sales in the fourth quarter of fiscal 2015 were USD1.58 billion, a decrease of 5.4% from the prior year fourth quarter. Higher sales in the defence, fire & emergency and commercial segments were not sufficient to offset a decline in access equipment segment sales resulting from lower demand in North America.

Access equipment segment sales declined 17.5% to USD769.5 million for the quarter, attributable largely to a slow-down in the order rate in North America. A stronger US dollar also negatively impacted access equipment segment sales by USD26.2 million.

Charles L. Szews, Oshkosh Corporation CEO, says the soft demand in the access equipment and concrete mixer segments were not unexpected, "but construction activity in North America and Europe remains on the upswing, which we believe will lead to stronger demand for these products in coming months".

"Our Defence business is rebounding and experiencing increased interest in our expanding portfolio of tactical wheeled vehicles," he says, pointing out that more countries are engaging with Oshkosh to explore the purchase of Mine Resistant Ambush Protected All Terrain Vehicles (M-ATVs).

"In the fourth quarter, Oshkosh signed a contract with an international customer for 273 M-ATVs and we expect to secure a contract for more than 1,000 additional M-ATVs in our first quarter, the majority of which we expect to be sold in fiscal 2016. We continue to pursue opportunities to sell thousands of additional M-ATVs."

Szews is counting on approximately USD350 million of free cash flow in fiscal 2016, about half of which will go to share repurchases and dividends.