Warren

Attachments manufacturer Cascade Corp and equipment maker Terex Corp have given indications of the economic challenges facing the materials handling industry.

Cascade of Fairview, Oregon reported lower sales volumes in North America and Europe and higher material costs during the second fiscal quarter ended July 31. Consolidated net sales decreased 1%, excluding the impact of foreign currency changes. Cascade reported profit of USD10.5 million on sales of USD150.1 million for the quarter.

Cascade continues to reorganise its entire European business. The firm has taken steps to reduce its workforce in Almere, the Netherlands and transfer certain products to Verona, Italy. "We are evaluating other changes," says Robert C Warren Jr, Cascade president and chief executive officer. "Some may be significant." No additional details were provided.

Warren indicates that Cascade does not anticipate an improvement in the European market and expects "further erosion during the last six months of year."

Material price increases of 5% to 10% are prevalent "with up to 20% in some cases," Warren notes in a conference call with security analysts. While Cascade seeks to pass along the increases, "some contracts are in place that preclude raising prices".

Cascade's construction attachment market "has dropped in half" and is "in worse shape than the lift truck market," Warren observes. "Our sales have tracked the prime mover market for excavators and wheel loaders," but Cascade is scrambling in the construction equipment market where dealers have worked through their inventories and are unwilling to take on new inventory. As a result, Cascade is living with short lead times.

Cascade "had a problem with a casting on a new product in Europe," Warren says. A supplier "had a constraint in getting those casting sets to us."

Warren notes that Cascade was "quite successful in our marketing effort in Europe" for the single-double pallet handler but the delay pushed back potential sales of about USD1 million. The product introduction is occurring in Cascade's third fiscal quarter and may lead to recapturing the lost revenue.

Meanwhile, Terex of Westport, Connecticut lowered its 2008 guidance due to changing market conditions.

For the full year, Terex projects earnings per share of USD6.35 to USD6.65, down from its previous guidance of USD6.85 to USD7.15.
The equipment manufacturer had 2007 earnings per share of USD5.85 on sales of more than USD9.1 billion.

Continued market softening and input costs exist in the Terex aerial work platforms and construction segments in western Europe and the US, says Ron DeFeo, the firm's chairman and CEO.