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Currency hurts Hyster-Yale and Terex

Tuesday, 5 May 2015 ( #717 ) - United States
News Story
Fluctuations in the dollar have affected performance.
Unfavourable currency movements have impacted on Hyster-Yale and Terex, which have both released their financial reports for the last quarter.

Hyster-Yale Materials Handling, Inc. announced consolidated revenues of USD622.3 million (net income of USD13.9 million) for the first quarter of 2015, down from USD676.0 million (net income of USD22.1 million) for the same period last year.

Net income for the forklift business fell from USD22.1 million to USD17.5 million on revenues of USD621.1 million – falling from USD676.0 million for the first quarter of 2014, while profit was listed at USD27.0 million for the first quarter of 2015, compared with USD31.6 million for the first quarter of 2014.

The company attributes falling revenues to "unfavourable currency movements … mainly from the continued strengthening of the US dollar against the euro, substantially fewer unit shipments in 2015, primarily due to the planned lower volumes in Brazil following the closure of the old plant and planned slow production ramp-up at the new plant, and a slight shift in sales to lower-priced lift trucks in the Americas".  

"In the first quarter of 2015, worldwide new unit shipments decreased to 19,859 units from 20,641 units in the first quarter of 2014.  Excluding Brazil, shipments were slightly higher than in the first quarter of 2014 as a result of higher shipments in North America and an increase in shipments of higher-priced lift trucks in Europe," according to a company statement.

The outlook is cautious for the medium term, with Hyster-Yale flagging decelerating growth rates for the global forklift market in the remainder of 2015, "resulting in nominal growth compared with 2014". However, modest growth is tipped for Western Europe, the Middle East and Africa. "The North America, Latin America, Asia Pacific and China markets are expected to be relatively flat and declines are expected in the Brazil, Eastern Europe and Japanese markets," the company predicts.

Despite these market conditions, the company expects a moderate increase in unit shipments and parts volumes.  

Terex Corporation has announced a loss from continuing operations of USD2.1 million compared to a positive result of USD32.6 million for the corresponding 2014 quarter.

Net sales were essentially flat on a currency-neutral basis, according to Terex, which notched up income from operations of USD44.2 million in the first quarter of 2015, down USD30.8 million from USD75.0 million in the first quarter of 2014.

"Operationally, the first quarter was generally in line with our expectations in most of our businesses, and we are encouraged by our order and backlog trends," says chairman and CEO Ron DeFeo. "However, our overall results were weighed down by lower margins in our AWP segment and an unusually high tax rate."

Other challenges were labour issues at the West Coast ports, severe weather conditions in some regions in the US and uncertainty surrounding oil and gas.

"Currency exchange rates, an unfavourable product mix of fewer booms and more telehandlers, and higher factory production rates in the prior year first quarter also negatively impacted the year-over-year margin comparison.

"Importantly, our AWP (aerial work platform) segment exited the first quarter with a meaningfully higher operating margin run rate than its overall margins for the quarter. This, coupled with a strong backlog, gives us confidence that AWP will return to more normalised operating margins in the second quarter," he notes.

Looking forward, DeFeo expects "strong performance from our AWP segment and improvement from our other segments throughout the remainder of 2015".

He anticipates net sales of between USD6.2 billion and USD6.6 billion for the full year.
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