Machinery Outlook

Transcription

Machinery Outlook

machinery
VOLUME 8.14
OUTLOOK
EUROPE
ISSUE 8 2014
INSIDE
•
U.S. Construction Spending Hits
Highest Level In 5-1/2 Years
•
SANY Heavy Industry’s Profits
Decline 48%
•
CNH To Cut Workforce At Its
Grand Island Plant
•
Troy Resources Buys $1.1 Billion
Of Doosan Mining Equipment
For Karouni Gold In Guyana
•
Hertz Global Holdings, Inc.
Withdraws 2014 Guidance
•
Deere Announces Layoffs
•
Tadano sales up nearly 16%
•
Deere Reports 3rd Quarter
•
Palfinger Record Half Year
•
Deutz First Half Revenues And
Profits Up
•
Finning 2nd Quarter 2014
Revenues Up 9%, Profits Up
4%
•
Wajax 2014 2nd Quarter
Revenues Up 3%, Profits Down
8.8%
•
Kobelco Equipment Revenues
Up 14%
®
A Publication of Manfredi & Associates
HEARD IN THE DIRTTM
Farm Tractor Market Forecast, A Tale Of Two Or More Markets, Not One
The farm tractor market is often thought of as one market; however, there are at
least two distinct markets, each influenced by its own economic demand drivers
and applications. The tractors sold to farmers to produce food and work around
farm sites represent one market. They usually have 100 hp or more and are
used to tow implements of one sort or other, hay wagons, hay balers, thrashers,
windrowers, etc. Demand for this size category closely follows a statistic called
farmers’ net cash receipts, which is the amount farmers have left over after paying
for all their input costs that include seed, fertilizers, fuel, etc.
Tractors under 100 hp are also employed for multiple jobs around farms,
but increasingly are sold to part time farmers, homeowners, nurseries, turf
management companies, etc. Sales of units under 100 hp are influenced by
housing-related statistics.
(continued on page 3...)
GENERAL
Copyright © Manfredi & Associates
DISTRIBUTORS
MANUFACTURERS
RENTAL
ISSN 1464-1313
The content of this report represents our interpretation and analysis of inforrmation generally available to the public or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completeness. It does not contain
material provided by our clients. Individual companies reported on and analyzed by Manfredi & Associates may be clients of this and or other Manfredi & Associates services. This information is not furnished in connection with a sale or offer to sell securities
or in connection with the solicitation of an offer to buy securities.
Manfredi & Associates,1157 North Indian River Drive, Cocoa, FL 32922, phone (847) 949-9080, fax (847) 949-9910 www.machineryoutlookeurope.com
machinery OUTLOOK ®
Table of Contents
AGCO and India’s TAFE Reach Agreement Governing Any Buyout Deal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
AGCO Cuts Jobs In Kansas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Allmand Acquired By Briggs & Stratton. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Caterpillar Produces 75,000th Wheel Tractor-Scraper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
CNH Industrial Acquires Sprayer Manufacturer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
CNH Industrial Expands Construction Equipment Production in Iowa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
CNH To Cut Workforce At Its Grand Island Plant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Deere Announces Layoffs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Deere Reports 3rd Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Deutz First Half Revenues And Profits Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Finning 2nd Quarter 2014 Revenues Up 9%, Profits Up 4%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Former Multiquip Exec Joins Allen Engineering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Hertz Global Holdings, Inc. Withdraws 2014 Guidance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Indonesian Heavy Equipment Companies Hope For Revival In 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
John Deere Certified Pre-Owned Farm Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Kobelco Equipment Revenues Up 14%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Komatsu Purchases New York City Area Dealer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Manitou 2014 Half-Year Revenues Up 9%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Palfinger Record Half Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Ring Power Corporation Now Authorized Towmaster Dealer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Ritchie Bros. 2nd Quarter Revenues Up 11%, Profits Up 30%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SANY Heavy Industry’s Profits Decline 48%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Strongco 2nd Quarter Slowed By Heavy Weather . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Tadano sales up nearly 16% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Toro Sales Up 11.3 % To Set Third Quarter Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Troy Resources Buys $1.1 Billion Of Doosan Mining Equipment For Karouni Gold In Guyana. . . . . . . . . . . . . . . . . . . . . . . . . . 11
United Rentals Opens Eight Specialty Rental Branches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
U.S. Construction Spending Hits Highest Level In 5-1/2 Years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Vermeer Names Jason Andringa Incoming President, CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Wacker Neuson 2nd Quarter Revenues Up 2%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Wajax 2014 2nd Quarter Revenues Up 3%, Profits Down 8.8% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Ziegler Cat Celebrating 100th Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
w w w. m a c h i n e r y o u t l o o k . c o m
© Manfredi & Associates, Inc
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ISSUE 8 2014
(....continued from front page)
U.S. Retail Sales of Farm Tractors & Combines
HP Range
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Under 40
% chg. Prev. Period
122,340
115,849
-5.9%
98,976
-14.6%
79,659
-19.5%
83,999
5.4%
84,594
0.7%
92,207
9.0%
100,685
9.2%
116,973
16.2%
128,000
9.4%
40 & Under 100
% chg. Prev. Period
75,555
78,178
3.5%
67,885
-13.2%
48,416
-28.7%
48,318
-0.2%
50,036
3.6%
54,279
8.5%
57,120
5.2%
59,070
3.4%
59,000
-0.1%
100 & Over
% chg. Prev. Period
16,682
20,916
25.4%
26,291
25.7%
22,863
-13.0%
26,971
18.0%
27,427
1.7%
31,732
15.7%
37,275
17.5%
28,000
-24.9%
26,000
-7.1%
2,988
3,664
22.6%
4,431
20.9%
4,512
1.8%
5,784
28.2%
5,977
3.3%
6,935
16.0%
6,908
-0.4%
5,267
-23.8%
4,200
-20.3%
217,565
218,607
0.5%
197,583
-9.6%
155,450
-21.3%
165,072
6.2%
168,034
1.8%
185,150
10.2%
201,988
9.1%
209,310
3.6%
217,200
3.8%
6,177
7,116
15.2%
8,463
18.9%
9,690
14.5%
10,678
10.2%
9,898
-7.3%
9,820
-0.8%
10,765
9.6%
8,265
-23.2%
6,600
-20.1%
2 Wheel Drive
4 Wheel Drive
% chg. Prev. Period
Total Farm Wheel Tractors
% chg. Prev. Period
Self Propelled Combines
% chg. Prev. Period
The 2013 total farm tractor market was slightly less than 202,000 units. Of that amount, approximately
158,000 units sold were under 100 hp. Almost all of these units are produced outside of North America
and imported. The balance of approximately 44,000 units was over 100 hp and included nearly 7,000 four
wheel drive tractors. Almost all of the over 100 hp units are produced inside of North America.
We have plotted retail sales of tractors under 40 hp alongside U.S. housing starts to illustrate the
connection between the two time series. When housing starts are good, people spend money for mowing
equipment as well as purchase grounds care services. The under 40 hp category also includes tractors sold
to sundown farmers, people who work in town and live on the outskirts with some land who farm in their
spare time. I expect the under 40 hp segment to grow in 2014 by more than 16% and to continue the
upward trend in 2015 with additional growth of about 9%.
The 40 & under 100 hp segment, a very large segment indeed, with slightly less than 60,000 units sold in
2014, is often associated with farming of corn, soybeans and vegetables, which are usually referred to as
row-crops. This market is generally slow and steady from year to year. I expect it to be up slightly in 2014
and down slightly in 2015.
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ISSUE 8 2014
Retail Sales of Farm Tractors Under 40 hp vs U.S. Housing Starts
135,000
1.900
125,000
1.700
Units
1.300
105,000
1.100
95,000
0.900
0.700
75,000
0.500
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
E
20
15
F
85,000
Millions of Starts
1.500
115,000
Under 40
Housing Starts
The money makers for the major farm tractor producers are the units 100 hp & over, 4 wheel drive tractors
and self-propelled combines. Farmers’ net cash income influences the retail sales of these machines as
illustrated in the following graph.
Retail Sales of U.S. Farm Tractor 100 hp & Over and 4-Wheel Drive Tractors
vs Farmers’ Net Cash Income
50,000
140.0
45,000
130.0
120.0
40,000
110.0
35,000
100.0
30,000
90.0
25,000
80.0
20,000
70.0
60.0
15,000
2006
2007
2008
2009
2010
100 hp & over and 4 whl dr
2011
2012
2013
2014
Net Cash Income
2014 farmers’ net cash income is expected to be approximately €102.8 billion. The consensus forecast
for 2015 is that net cash income will come in at about €97.3 billion, a decline of approximately 5%.
Since 2013, farmers’ net cash income has declined approximately 8%. The two-year downturn is having
a multiplier effect on sales of large tractors. I expect 2014 sales of large farm tractors to decline by
approximately 25% followed by a further decline in 2015 of about 7%. Exacerbating the new tractor
sales decline is a surplus of low hour used tractors. The quantity of used tractors is so large that several
manufacturers have introduced dealer programs for used equipment aimed at providing their customers
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ISSUE 8 2014
with extended warranties, maintenance agreements and low interest financing. Most industry analysts
expect the used inventory overhang to have an impact on new tractor sales for several years.
There is a similar problem with used combines impacting new combine sales. Combines are used once
a year. Up until now farmers have been willing to keep upgrading their machines to have the latest and
greatest gadgets and to assure they have the harvesting capacity when they need it. But sales have slowed.
Deere just announced its Certified Pre-Owned (CPO) Equipment program to encourage farmers who
own older machines to upgrade to newer used models.
One positive sign for the farm tractor markets going forward is that farmland prices have continued
to increase which adds to the farmers’ feeling of overall wellbeing. Real estate prices are not strongly
correlated to farm tractor sales. In the early 1990 tractor sales declined, but real estate prices continued
their upward pattern. Again in 2002 tractor sales declined and the value of real estate was relatively stable.
In 2007 there was a moderate drop in real estate values. In 2009 land values stopped declining and began
to increase again.
I have included this data because I believe land values are an indication of the farmers borrowing capacity.
As long as land values stay relatively high, farmers should be able to weather any economic downturn,
borrow to pay to store gains until prices are more favorable and of course purchase tractors.
100 hp & over
Billions of Dollars
2014
2010
2012
2008
500.0
2006
14,000
2004
1,000.0
2002
19,000
2000
1,500.0
1998
24,000
1996
2,000.0
1994
29,000
1990
1992
2,500.0
1988
34,000
1986
3,000.0
1984
39,000
1982
Units
100 hp & Over U.S. Farm Tractor Retail Sales vs. Value of Farm Real Estate
Value of Real Estate
U.S. Construction Spending Hits Highest Level In 5-1/2 Years
The Commerce Department reported that U.S. construction spending hit its highest level in more than
5-1/2 years in July as both private construction and state and local government expenditures increased.
Construction spending increased 1.8% to an annual rate of €776 billion, the highest level since December
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ISSUE 8 2014
2008. Following June’s revised 0.9 % decline, July’s percentage increase was the largest since May 2012 and
reflected gains across all categories, with the exception of federal government.
Economists polled by Reuters had forecast construction spending increasing 1.0% after a previously
reported 1.8% drop in June. Construction spending in July was sustained by a 3.4% jump in state and local
government projects, which raised expenditures to their highest level since June 2012. The increase in state
and local government expenditures, which was the largest since April 2013, offset a 1.1% drop in spending
by the federal government on construction projects.
Private construction, the largest portion of construction spending, increased 1.4% to its highest level since
November 2008. Private residential construction spending gained 0.7% as housing starts rebounded.
The housing market is recovering after stagnating from the second half of 2013 in the wake of a spike in
mortgage rates and higher home prices amid a stock shortage. Part of the increase in private residential
construction spending reflected home improvements. Investment in private nonresidential structures such
as factories and gas pipelines jumped 2.1% in July to its highest level in five years.
AGCO Cuts Jobs In Kansas
AGCO announced that it’s laying off 24 workers at its Hesston, Kansas, plant and more layoffs may occur
in the weeks ahead. The plant, which employs about 1,500 workers, makes combines, balers and mowers
sold in the U.S. and exported around the world. AGCO blamed a drop in commodity prices, which has
given farming operations less money for their crops, and as a result less money to purchase equipment.
The same reason was given for a drop in second-quarter sales and income. While the company said it
expected farm production to increase in the months ahead, it was lowering its profitability outlook for the
year.
Second-quarter sales dropped about 10% to €2.2 billion. Tractor sales were down 2% in North America,
6% in western Europe and 18% in South America. Sales of combines were down 4% in Western Europe,
15% in North America and 25% in South America. At Hesston, the company is reducing the number
of shifts to two from three at the facility’s plants involved in machining, welding, fabrication and laser
operations.
Former Multiquip Exec Joins Allen Engineering
Jay Allen, President of Allen Engineering Corporation (AEC), recently announced that Roger Euliss has
been promoted to the position of vice president of sales and marketing. Euliss has been with AEC for
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ISSUE 8 2014
the past two years serving as sales and marketing director and will continue leading the AEC sales and
marketing team worldwide. As an officer of the company, Euliss will also work very closely with Allen
regarding strategic direction and new opportunities for AEC.
Euliss will also continue on as president of Equipment Synergy International (ESI), a manufacturer and
distributor of small-to-medium construction equipment which includes light compaction, concrete placing
and finishing, concrete cutting, dewatering pumps, portable generators and related specialized equipment.
Prior to founding ESI and joining AEC, Euliss was president and COO of Multiquip, Inc. where he
served the equipment rental industry for over 28 years.
AEC is headquartered in Paragould, Arkansas. The company designs, engineers, manufactures, and
markets equipment that is used on construction work-sites by concrete placing, finishing, and paving
professionals. AEC is a family-owned, American manufacturer of high quality equipment that is sold and
rented through a network of dealers and rental centers around the world.
AGCO and India’s TAFE Reach Agreement Governing Any Buyout Deal
AGCO Corporation reported that it has reached an agreement with its largest shareholder, India’s Mallika
Srinivasan, governing any potential acquisition of AGCO. Srinivasan’s Chennai, India-based company,
Tractor and Farm Equipment Limited, or TAFE, now owns more than 8 million shares, or 8.6%, of
AGCO’s stock. According to a new August 29th agreement with AGCO, TAFE, Srinivasan and their
affiliates have agreed not to increase their stake beyond 12.5% of AGCO. TAFE is permitted under the
agreement to make a non-public offer to AGCO Chairman Martin Richenhagen and AGCO’s board
“to acquire all or a part of the Issuer [AGCO] or propose another similar strategic transaction that would
result in a change of control of the Issuer.”
AGCO has agreed “to promptly inform TAFE of any offer to acquire all or substantially all of the Issuer,
or other similar strategic transaction that would result in a change of control of the Issuer, submitted to
the Board for formal consideration or which the Board has requested management to evaluate before
consideration, and any commencement of a review of strategic alternatives which includes a possible sale
of all or substantially all of the Issuer, and permit TAFE the opportunity to make a private offer to acquire
all or substantially all of the Issuer, or other similar strategic transaction that would result in a change of
control of the Issuer...”
TAFE would be released from the restrictions in the agreement with AGCO if AGCO publicly
announces a review of its strategic alternatives which includes a possible sale of all or substantially all of
the company or if any person commences a public tender offer for AGCO.
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ISSUE 8 2014
TAFE is the third-largest tractor manufacturer in the world and second-largest in India. Atlanta Business
Chronicle reported in April about Srinivasan’s and TAFE’s acquisition of a giant stake in AGCO. TAFE
was AGCO’s largest single stock owner as of March 2014. Srinivasan is a member of AGCO’s board
CNH Industrial Acquires Sprayer Manufacturer
CNH Industrial N.V. said that it has entered into a definitive agreement to acquire the assets of precision
spraying equipment manufacturer Miller-St. Nazianz, Inc. The assets of Miller acquired as part of the
transaction will become part of New Holland Agriculture, a CNH Industrial brand. CNH said the deal
builds off a four year manufacturing and distribution partnership between New Holland and Miller in
North America.
Under the terms of the agreement, CNH Industrial N.V., through its wholly-owned subsidiary CNH
Industrial America, LLC, will acquire Miller’s business in its entirety. The agreement is subject to
customary closing conditions, with the goal of closing before the end of the year.
Headquartered in St. Nazianz, Wisconsin, Miller was founded as a hardware retailer in 1899. Miller
has expanded through five generations of family management to become a manufacturer of front boom
sprayers. Miller’s manufacturing facilities and 260 employees are supported by a worldwide distribution
network.
Allmand Acquired By Briggs & Stratton
Briggs & Stratton Corporation announced that it has acquired Allmand Bros., Inc. for approximately €49
million in cash for all outstanding shares of Allmand. Briggs & Stratton financed the transaction from
cash on hand. Founded in 1938 and based in Holdrege, Nebraska, Allmand designs and manufactures
towable light towers, industrial heaters, and solar LED arrow boards. Allmand had recent annual sales of
approximately €63.3 million.
This is the first investment Briggs & Statton has made in it’s construction equipment customer base. The
company is headquartered in Milwaukee, Wisconsin. It is the world’s largest producer of gasoline engines
for outdoor power equipment. Its wholly-owned subsidiaries include portable generators and pressure
washers, and it is a leading designer, manufacturer and marketer of lawn and garden and turf care through
its Simplicity, Snapper, SnapperPro Ferris, Murray, Branco and Victa brands. Briggs & Stratton products
are designed, manufactured, marketed and serviced in over 100 countries on six continents.
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ISSUE 8 2014
Ziegler Cat Celebrating 100th Year
Ziegler Caterpillar is celebrating its 100th year of operation this year. The dealership based near
Minneapolis, Minnesota ,was founded by William H. Ziegler in 1914. In 1920, the company became the
distributor of the C. L. Best Tractor Company and pioneered the use of tracked equipment in the region.
In 1925, the C. L. Best Tractor Company absorbed Holt Manufacturing Company to form the Caterpillar
Tractor Company. Following the merger, Ziegler bought the Highway Supply Company, which handled
the Holt line in the Minnesota area. The Holt purchase, along with the acquisition of Lange Tractor and
Equipment Company in 1937, gave Ziegler exclusive distribution of the Caterpillar line in Minnesota.
Today, Ziegler is one of the country’s largest Cat dealers, representing the full line of construction, paving,
forestry, and mining equipment, as well as Cat trucks, generators, and industrial engines in Minnesota as
well as in west, central, and northeast Iowa. Ziegler now has 1,700 employees and 21 locations throughout
Minnesota and Iowa.
SANY Heavy Industry’s Profits Decline 48%
SANY Heavy Industry posted a decrease in profits of 48.34% from the same six month period last year.
With a profit of 1.37 billion yuan (€176.3 million), the company reported revenues of 19.72 billion yuan
(€2.5 billon) in the first six months. Revenue saw a 10.7% decline from the same period last year.
The company attributed the profit and revenue drops to “market adjustment.” SANY is optimistic about
its growth prospects in the medium-to-long term, however, thanks to “continuous improvement in the
country’s regional, industrial and urban-rural structure.” The company also cited “increased infrastructure
demand in railways, urban mass transit and water conservation projects, as well as opportunities brought
about by the development of other emerging economies” as reasons for optimism.
In the first six months of this year, SANY reported it sold 10.12 billion yuan (€1.3 billion) worth
of concrete placement machinery, more than any other competitor worldwide, and more excavating
machinery than any other competitor in China, at a value of 4.88 billion yuan (€628 million).
CNH To Cut Workforce At Its Grand Island Plant
CNH Industrial America announced that it will reduce its manufacturing workforce at its Grand Island,
Nebraska, plant by nearly 240 people. The reduction includes approximately 170 full-time employees, as
well as 68 third-party agency employees assigned to the plant. The indefinite layoff is expected to begin in
October and be completed in November.
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According to company management, the layoffs were made as the company responds to market demands
for its equipment. This is the second layoff announced at the Grand Island plant this year. In May, the
company said it would reduce 200 third-party agency positions from May 30 through June 30 because of
reductions in orders for the products made in Grand Island.
The plant manufactures combine harvesters and self-propelled windrowers.Three models of combines,
including one New Holland model and two Case IH models, are made at the Grand Island plant, making
it the only CNH manufacturing facility to use a mixed-model production system.
Vermeer Names Jason Andringa Incoming President, CEO
Vermeer Corporation has named Jason Andringa incoming president and CEO, taking over the position
from his mother, Mary Vermeer Andringa, and continuing the Vermeer family’s leadership of the company
into the third generation. The transition will be fully effective on Nov. 1, 2015 when Jason will assume
the role of president and chief operating officer, a position he will hold for one year before assuming full
leadership responsibilities.
Since 1989, Mary Andringa has headed the firm along with her brother Bob Vermeer, who currently
serves as the company’s chairman of the board. On November 1, she will assume the role of CEO and
chair of the board, while Bob will become chair emeritus. “As an entire family, we are proud to announce
the third-generation leadership who we know with confidence can propel us to new heights,” Mary says,
who has served in her current position since 2009.
Vermeer was founded in 1948 by Mary and Bob’s father, Gary Vermeer, a member of the Association
of Equipment Manufacturer’s Hall of Fame. The company, now known in construction for its trenchers,
directional drills and environmental equipment, began when Gary created a mechanical hoist for his grain
wagon. He retired as CEO in 1989 and passed away in 2009.
Jason currently serves as president of the firm’s Forage and Environmental Solutions division. Prior to this
position he served as vice president for dealer distribution and global accounts, and spent three years in the
Netherlands as managing director for Europe, Middle East, Africa and CIS. He joined Vermeer in 2005
after serving as a staff engineer at NASA’s Jet Propulsion Laboratory.
“I am honored to have the opportunity to lead Vermeer as a family-owned and operated, global company
into a prosperous future,” Jason says.
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Troy Resources Buys €900 Million Of Doosan Mining Equipment For Karouni Gold In Guyana
Australian gold producer Troy Resources has purchased more than €900 million worth of mining
equipment for its €68.8 million Karouni Gold mine in the West Omai region of Guyana, which is
expected to begin production next year. The purchased equipment includes 12 Doosan DA40 trucks and
three Doosan DX 500 excavators manufactured in South Korea by Doosan and sold by Farm Supplies. In
addition to delivery of the equipment, Farm Supplies will also provide training for its Guyanese operators
and technicians for using and maintaining the new equipment. The company claimed that the purchase of
Doosan equipment is the largest ever made in Latin America or the Caribbean.
The Karouni project, a Cuyuni, Region Seven (Cuyuni Mazaruni) project, is currently preparing for the
construction phase, including works to set-up a ball mill, mine operations, employee housing and other
infrastructure.
Following the release of the preliminary economic assessment (PEA) and the scoping study in January,
and the PEA technical report on the Karouni project in March this year, the company considered two
open cut pits, Smarts and Hicks, and one underground mine for the project. With a mine life of more than
seven years, the mine is expected to produce a total of 633,000oz of gold during its life time, 90,000oz
of gold a year and 102,000oz of gold in the first year of operation. The mine is expected to employ
approximately 300 workers, including contractors.
Troy plans to complete the construction work on the mine before mid 2015 and start production between
this December and February 2015.
Hertz Global Holdings, Inc. Withdraws 2014 Guidance
Hertz Global Holdings, Inc. revealed that it is withdrawing its full-year 2014 guidance due to certain
operational challenges and an ongoing accounting review, which had earlier compelled management to
postpone its first-quarter 2014 earnings announcement and related 10-Q filing.
The company revealed that its profits for 2014 will be much lower than its earlier projected guidance range
of €1.3 to €1.6 per share. Apart from the ongoing accounting review, Hertz Global has blamed continued
weak performance at its construction-equipment rental business, higher U.S. fleet costs and massive auto
recalls for the withdrawal of 2014 guidance. The company has been witnessing massive auto recalls since
April this year which resulted in tight inventory in some places thereby failing to meet the demand.
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In June, Hertz announced a review of its financial records after its audit committee concluded that
problems with the company’s financial statements for the last few years would need to be corrected
because of mistakes. Hertz delayed its first and second quarter financials. The company previously said it
had identified errors totaling $46.3 million in the prior periods.
Hertz announced in March that it would spin off its equipment rental business, Hertz Equipment Rental
Corporation, into a separate business by early 2015, but has since acknowledged the spinoff could be
delayed.
Deere Announces Layoffs
Deere & Company announced it will reduce the size of its manufacturing work force at some agricultural
equipment factories only two days after it had announced lower third-quarter profits and readjusted
downward its profit outlook. The move will place more than 600 employees at four locations on indefinite
layoff. In addition, Deere is implementing seasonal and inventory adjustment shutdowns and temporary
layoffs at several of the affected factories.
The affected facilities include John Deere Harvester Works, East Moline, Illinois; John Deere Seeding
and Cylinder, Moline; John Deere Des Moines Works, Ankeny; and John Deere Coffeyville, Coffeyville,
Kansas. No other locations were included in the Aug. 15 layoff announcement.
According to the company, here’s the layoffs breakdown:
Des Moines Works (Ankeny)
• 110 employees will be placed on indefinite layoff with no projected recall date.
• The layoff will begin September 29.
• Des Moines Works currently has approximately 1180 manufacturing employees.
• Des Moines Works will have an extended shutdown from Sept 29 to Oct 31.
Harvester Works (East Moline)
• The layoff will begin October 20.
• Harvester Works currently has approximately 1,730 manufacturing employees.
• Harvester Works will have an extended seasonal shutdown from Sep 29 to Nov 3.
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Seeding & Cylinder (Moline)
• The layoff will begin August 25.
• Seeding & Cylinder currently has approximately 710 manufacturing employees.
Coffeyville
• The layoff will begin August 25.
• Coffeyville currently has approximately 185 manufacturing employees.
John Deere Certified Pre-Owned Farm Equipment
John Deere introduced a new Certified Pre-Owned (CPO) Equipment program to assist customers
looking for field-ready used machines with the latest technology. Every Certified Pre-Owned tractor or
combine is covered by a comprehensive PowerGard Protection Plan. All main components are covered
including engine, transmission, final drives, hubs, steering components, electronics, hydraulics, cab, and
air conditioning. All Certified Pre-Owned machines will also receive a free one-year subscription to
JDLink which monitors machinery location and performance, tracks fuel usage, and manages and protects
equipment from a laptop, desktop, or mobile device
Manitou 2014 Half-Year Revenues Up 9%
Manitou reported 9% growth in sales for the 2014 first half compared to the first half of 2013. The
improvement in the company gross margin to 14.5% of sales (13.7% in the first half of 2014) combined
with the decrease in overhead resulted in operating income from continued operations of €24.5 million
or 3.8% of sales (0.9% in the first half of 2013). The downward trend in the euro exchange rate in recent
months, in addition to continued efforts to reduce general overheads, contributed to the improvement in
results.
In the second half-year, Manitou is keeping track of market developments for the rental and agriculture
markets, first because of its high volatility and second because of its already pronounced slowdown. The
company is pursuing development efforts in growth regions, especially in North America and Northern
Europe. Manitou is also continuing to move forward with the implementation of the company’s new
roadmap through the recasting of the company organization and the simplification of the company
processes.
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Business review by division
The Rough Terrain Handling division (RTH) reported sales of €449.2 million, an increase of 13%
compared to the first half of 2013. Gross margin increased by 1.3%, driven by volume levels and efficiency.
The division also experienced a decrease in external expenses and benefitted from the favorable impact of
the decline in the euro. Recurring operating income amounted to €17.1 million compared to €0.4 million
for the first half of 2013, an improvement of +3.7 points.
The Industrial Material Division (IMH) recorded sales of €59.3 million, a decrease of 13% compared to
the first half of 2013 and an increase of 1%.
The Compact Equipment Division (CE) realized sales of €133.4 million, an increase of 5% compared to
the first half of 2013 and 9%. Manitou’s results were adversely affected by the extreme weather experienced
in North America during the first quarter. Compared to the first half of 2013, the division maintained its
gross margin at a high level and benefited from the leverage created by the additional volumes, allowing it
to increase its operating margin from 5.3% to 6.5%.
United Rentals Opens Eight Specialty Rental Branches
United Rentals, Inc. announced the further expansion of its specialty branch network with the addition
of seven U.S. locations and one in Canada: United Rentals Power & HVAC branches in Raleigh, North
Carolina; Detroit, Michigan; Cincinnati, Ohio; and Salt Lake City, Utah. These branches will provide
engineered power, heating, cooling and ventilation solutions for commercial, industrial and governmental
customers, and disaster recovery services.
United Rentals Trench Safety branches in Brantford, Ontario, and Beacon Falls, Connecticut, will provide
engineered excavation support and confined space entry systems, as well as worker training.
United Rentals Tool Solutions branches in Southaven, Mississippi, and Mobile, Alabama, will provide
temporary and long-term onsite tool management, including inventory tracking, inspections and
maintenance.
Paul McDonnell, senior vice president specialty operations, said, “We’re continuing to implement a major
expansion of our specialty lines of business, following significant growth in 2013. These eight openings are
part of a broader plan for 2014 that will include additions to all of our specialty lines, including the pump
network we acquired in April.”
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Ring Power Corporation Now Authorized Towmaster Dealer
Ring Power Corporation has signed an agreement to represent Towmaster Trailers through its heavy
equipment and Cat rental store divisions. Towmaster manufactures 9 to 20-ton (8 to 18 t) tag trailers, 20
to 50-ton (45 t) tilt trailers and 70 to 120-ton (63.5 to 108.9 t) detachable gooseneck trailers, designed for
hauling construction and rental equipment. Headquartered in Litchfield, Minnesota, Towmaster Inc. has
been manufacturing trailers since the early 1970s.
Caterpillar Produces 75,000th Wheel Tractor-Scraper
Caterpillar Inc. recently commemorated the production of 75,000 wheel tractor-scrapers at the Decatur,
Illinois, facility. Scrapers were one of three product families, along with track-type tractors and motor
graders, upon which Caterpillar built its business following World War II. As the U.S. economy boomed
and populations began migrating from cities to suburbs, housing and infrastructure construction exploded,
spurring demand for high-volume earthmoving tools like the wheel tractor-scraper. Growth was strong all
over the world as new global infrastructure began to take shape. Caterpillar responded by expanding the
product line and investing in manufacturing capacity, including the operation in Decatur.
Tadano sales up nearly 16%
Tadano, a Japanese crane manufacturer, reported sales of JPY 44,082 million (€336.1 million) for the first
quarter of the 2014 financial year (three months ending 30 June 2014), up 15.7% on the first quarter of the
2013 financial year.
The increase for sales of wheeled mobile all terrain and truck mounted cranes and straight boom truck
loader cranes in Japan was 16%, to JPY 16,743 million (€127.3 million). Sales from outside Japan were up
13.1% from the same period a year earlier, at JPY 27,339 million (€208 million). Sales from outside Japan
were 62% of the total.
Operating income was JPY 5,817 million (€44.3 million), up 24.3% from the same period during the
previous fiscal year. Net income for the quarter was JPY 3,698 million (€28.5 million), down 6.9% from
the same period during the previous fiscal year.
Toro Sales Up 11.3 % To Set Third Quarter Record
The Toro Company, Bloomington, Minnesota, reported earnings of €39.5 million on a sales increase of
11.3% to a company record €448.8 million for the third quarter of fiscal 2014. In the comparable fiscal
2013 quarter, the company delivered earnings of €31.7 million on sales of €403.2 million.
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For the first nine months, Toro reported earnings of €128.9 million on a sales increase of 6% to €1.4
billion. In the comparable fiscal 2013 period, the company posted net earnings of €118.5 million on net
sales of €1.3 billion.
“After successfully managing through the challenges of a late spring, our quarterly results benefited from
favorable summer growing conditions in key markets that, similar to last year, helped drive retail sales
across most of our businesses. Shipments of golf equipment and irrigation products increased on strong
retail demand for our innovative product offerings. In addition, we returned to a more normal quarterly
flow for channel purchases of professional equipment subject to Tier 4 emission standards. Landscape
contractor customers continued to invest in turf maintenance equipment, which also helped drive sales. On
the residential side of our business, early demand for snow products increased as channel partners began to
prepare for the anticipated strong retail pre-season,” said Michael Hoffman, Toro’s chairman and CEO.
“We are optimistic as we enter the final quarter of our fiscal year and Destination 2014 journey. With our
Centennial on July 10, 2014, we officially launched the company’s second century. Looking ahead, we will
continue to focus on the key things that have driven our past performance: developing innovative products,
serving our customers and executing in the marketplace. We will keep a close eye on both retail demand
and field inventory levels and make adjustments as necessary. We also will continue to seek opportunities
across the enterprise to improve productivity and leverage expenses,” he said.
“Of course, we remain mindful of the things outside of our control, such as unfavorable weather or
economic conditions, that could create potential challenges for our customers. That said, a strong snow
pre-season and continued productivity gains, somewhat offset by product mix, should drive solid fourth
quarter revenue and earnings results,” he said. The company now expects revenue growth for fiscal 2014 to
be about 6%.
Deere Reports 3rd Quarter
Deere & Company announced worldwide profits increased 10.1% to €623.2 million, compared with
€563.3 million for the same period last year. For the first nine months of the year, profits increased 11% to
€1.9 billion compared with €1.7 billion last year.
Worldwide revenues increased 15%, to €7.6 billion, for the third quarter and rose 13% to €20.8 billion for
nine months. Sales of the equipment operations were €7.1 billion for the quarter and €19.3 billion for nine
months, compared with €6.1 billion and €17.1 billion for the same periods last year.
“John Deere delivered record third quarter performance in both sales and income,” said Samuel R. Allen,
chairman and chief executive officer. “Although a strong quarter, we are not satisfied that sales fell short
of our expectations due to weakening in certain international markets and short-term manufacturing
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Deere & Company
Selected Financial Results
(millions of euros)
Three months ended July 31st
2014
2013
%Change
€ 5,511
€ 1,387
€ 6,898
€ 519
€ 96
€6,205
€1,162
€7,367
€464
€82
-11.2%
19.4%
-6.4%
11.8%
13.1%
€7,513
€7,916
-5.1%
€744
€153
€197
€1,094
-€66
-€356
€673
€1,057
€85
€185
€1,326
-€100
-€437
€788
-29.6%
Net Sales
Agricultural and Turf
Construction equipment
Total net sales
Financial Services rev.
Other revenues
Total net sales
and revenues
Operating profit:
Agricultural and Turf
Construction and Forestry
Financial Services
Total Operating Profit
Reconciling Items
Income Taxes
Profit
6.4%
-17.5%
-18.6%
-14.6%
inefficiencies resulting from the introduction of a record number of new products.”
Allen noted that the company’s global presence continues to grow due to strong customer preference for
the innovative line-up of John Deere products that have been introduced in the past year.
Summary of Operations
Sales of the worldwide equipment operations increased 16% for the quarter and 13% for nine months
compared with the same periods a year ago. Sales included price realization of 5% for the quarter and 4%
year-to-date and an unfavorable currency-translation effect of 5% for the quarter and 3% for nine months.
Equipment net sales in the United States and Canada increased 28% for the quarter and 18% year to date.
Outside the U.S. and Canada, net sales were essentially unchanged for the quarter and increased 7% for
nine months, with unfavorable currency-translation effects of 11% and 6%, respectively, for these periods.
Deere’s equipment operations reported operating profit of €891 million for the quarter and €2.6 billion for
nine months, compared with €766.3 million and €2.3 billion last year. The improvement for both periods
was primarily due to the impact of price realization and higher shipment volumes. These factors were
partially offset by higher production costs and raw material costs, unfavorable effects of foreign currency
exchange, as well as increased research and development expenses. The increase in production costs
primarily related to new products and engine-emission requirements.
Financial services reported income of €87.3 million for the quarter and €267.8 million for nine months
compared with €99.3 million and €275.9 million last year. Results were lower for both periods primarily
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due to increased selling, administrative and general expenses, narrower financing spreads and higher
reserves for crop insurance claims. These factors were partially offset by growth in the credit portfolio and
a lower provision for credit losses.
Company Outlook & Summary
Company equipment sales are projected to increase by about 13% for both fiscal 2012 and the fourth
quarter compared with the same periods a year ago. Included is an unfavorable currency-translation impact
of about 3% for the year and about 4% for the fourth quarter. For the full year, net income attributable to
Deere & Company is anticipated to be about €2.5 billion.
“Global economic conditions and dryness in several key markets warrant some caution in coming months,”
Allen said. “However, this year’s drought could positively influence our outlook as it spotlights the need
for John Deere’s highly productive agricultural equipment. Our new John Deere products have been well
received by customers around the world. This, combined with our increased focus on improved execution,
gives us confidence that Deere is well-positioned to capitalize on favorable global agricultural trends over
the long term.”
Equipment Division Performance
Agriculture & Turf. Sales increased 14% for the quarter and 11% for nine months, largely due to higher
shipment volumes and price realization, partially offset by the unfavorable effects of currency translation.
Operating profit was €800 billion for the quarter and €2.4 billion year to date, compared with €679.3
million and €2 billion, respectively, last year. Results were up in both periods primarily driven by the
impact of price realization and higher shipment volumes. These factors were partially offset by increased
production and raw-material costs, unfavorable effects of foreign currency exchange, and higher research
and development expenses.
Construction & Forestry. Construction and forestry sales increased 23% for the quarter and 24% for nine
months mainly due to higher shipment volumes and price realization. Operating profit was €89.4 million
for the quarter and €281.5 million for nine months, compared with €87 million and €240.4 million last
year. Results were up for both periods primarily due to the impact of price realization and higher shipment
volumes. These factors were partially offset by increased production and raw-material costs, as well as
higher research and development and selling, administrative and general expenses.
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Market Conditions & Outlook According To Deere Management
Agriculture & Turf. Deere’s worldwide sales of agriculture and turf equipment are forecast to increase by
about 13% for full year 2012, including a negative currency-translation impact of about 4%.
Industry sales for agricultural machinery in the U.S. and Canada are forecast to be up more than 10% for
2012. Full-year industry sales in the EU27 are now forecast to be flat as strength in the northern European
market offsets weakness in the South. Sales in the Commonwealth of Independent States are expected to
be up strongly in 2012.
Industry sales in Asia are projected to be down moderately for the full year due to softening in India and
China. In South America, industry sales are projected to be down 5% to 10% as a result of uncertainty in
Argentina and drought conditions earlier in the year in parts of the region.
As a result of dry weather, global grain supplies are expected to further tighten. This supports higher
commodity prices and should result in robust field activity in the 2013 crop year in markets throughout
the world.
U.S. and Canada industry sales of turf and utility equipment are expected to be flat to up 5% for 2012,
reflecting the drought conditions in the U.S.
Construction & Forestry.
Deere’s worldwide sales of construction and forestry equipment are forecast to increase by about 17%
for 2012. While construction equipment sales in the U.S. continue to show strong recovery, Deere has
experienced slower than expected sales activity in some international markets. World forestry markets are
projected to be flat in comparison to 2011.
Financial Services.
Full year 2012 income for Deere & Company for the financial services operations is expected to be
approximately €355.9 million, somewhat lower than the prior year. The forecast decline is primarily due
to an anticipated increase in selling, administrative and general expenses, narrower financing spreads and
higher reserves for crop insurance claims, partially offset by growth in the credit portfolio.
John Deere Capital Corporation
Net income attributable to John Deere Capital Corporation was €77.9 million for the third quarter and
€213.7 million year to date, compared with €77.9
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million and €213.6 million for the respective periods last year. Results were lower for the quarter primarily
due to higher selling, administrative and general expenses and narrower financing spreads, partially offset
by growth in the credit portfolio. Nine-month results were approximately the same as last year primarily
due to growth in the credit portfolio and a lower provision for credit losses, mostly offset by higher selling,
administrative and general expenses and narrower financing spreads.
Net receivables and leases financed by JDCC were €20.4 billion at July 31, 2012, compared with €18.1
billion last year.
Palfinger Record Half Year
Palfinger reported first half revenues at a record €540 million (US$ 729 million), up nearly 14% on the
€475 million ($641 million) from the same period a year earlier.
The Austria-based manufacturer of loader cranes and aerial work platforms forecast its full year 2014
revenue to exceed €1 billion ($1.35 billion) for the first time. Most of the growth came from Europe, the
company said, although since May the level has dropped back. Growth potential is still seen in the BRIC
countries and the marine sector. Palfinger said it sees the potential to increase consolidated annual revenue
to €1.8 billion ($2.4 billion) by 2017.
“We are satisfied with Palfinger’s performance in the first half of 2014,” said Herbert Ortner, Palfinger
CEO. “We continued to grow in Europe and managed to compensate the first-quarter slump caused by
the harsh winter in North America. Our marine business activities developed as planned, increasing by
approximately 10 %. Above all, the consolidation of our market position as compared to our competitors is
a clear sign that we are headed in the right direction.”
Strongco 2nd Quarter Slowed By Heavy Weather
Strongco posted €107.5 million (about U.S. $124 million) in total revenue for the second quarter,
compared to €110.9 million a year ago, a 3.1% decrease. However, product support revenue increased
5% to €29 million. Strongco’s president and CEO Bob Dryburgh said challenging weather conditions
that extended well into May curtailed construction activity across the country and limited oil-field access
delaying purchasing decisions by customers.
“The difficult winter exacerbated the already weakened market situation in eastern Canada causing a
further market decline and affecting sales of construction equipment and cranes,” Dryburgh said. “Crane
sales were also down in Alberta, compared to a much stronger market in 2013. However, sales of other
heavy equipment in western Canada and the eastern United States largely offset these short-term pauses
in the market.”
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Rental revenues for the second quarter were $5.7 million, down 25% from 2013. Dryburgh said the
company expects a better second half, noting that warmer and dryer temperatures in June resulted in
improved quoting activity and order backlogs.
“Management anticipates that heavy equipment markets across the country will generally follow
construction activity, with the possibility of some catch-up in the second half in some regions,” he said.
Most economists continue to forecast modest growth for Canada overall in 2014 with construction
markets remaining active. Growth is expected to be strongest in Alberta, led by robust activity in the
oil sector, and weakest in Quebec where activity continues to be stifled by the ongoing investigation of
corruption in the construction industry.
Based in Mississauga, Ontario, Strongco represents Volvo Construction Equipment, Case Construction,
Manitowoc Cranes, Terex Trucks, Takeuchi and a number of other brands.
Deutz First Half Revenues And Profits Up
Engine manufacturer Deutz reported revenues for the first half of the year were up 13.8% to € 753 million
(US$ 1.02 billion). It sold 99,079 engines in the first six months of 2014, a 15.3% increase on the first-half
2013 figure of 85,097 engines sold.
The company’s underlying earnings before interest and tax (EBIT) almost doubled compared to a year ago
to € 20.1 million (US$ 27.1 million). However, one-off items relating to cost-saving measures and plant
closures reduced this to € 6.2 million (US$ 8.4 million).
“We are particularly pleased that we were able to pay our shareholders a dividend totaling just short of
€ 8.5 million (US$ 11.5 million) in May 2014,” said Deutz CFO Dr Margarete Haase. “We anticipate
further improvements in earnings over the coming years as a result of the optimization process that we
have initiated for our network of sites.”
However, despite higher revenues and profits, the company said its order intake in the first half of the year
was down to € 745 million (US$ 1.01 billion), compared to € 844 million (US$ 1.14 billion) a year ago.
However, it said that the first half of 2013 set a new record for Deutz’ order intake.
Finning 2nd Quarter 2014 Revenues Up 9%, Profits Up 4%
Finning International Inc., based in Vancouver, British Columbian, Canada, reported second quarter
revenues increased by 9% to €1.4 billion. Higher revenues in Canada and the UK & Ireland were driven by
strong new equipment sales and more than offset the revenue decline in South America. Product support
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revenues grew by 4%, driven mostly by higher parts sales in Canada. Finning is generally considered to
world largest Catpillar dealer.
The Company generated €97.3 million in free cash flow compared to €5.5 million in the second quarter
of 2013, reflecting strong working capital management across the Company. Invested capital declined by
€63.3 million from the first quarter of 2014, despite the €72.8 million increase in revenues.
“I am pleased with our results for the quarter, particularly our profitability performance in Canada and
the ability of our South American team to maintain margins under challenging market conditions. Our
strong free cash flow demonstrates we are improving the capital efficiency of the business. While we
recognize that sustainable improvements to our operating performance will take time, we are making good
progress on the execution of our operational priorities and we are tracking well on our key financial and
operating metrics,” said Scott Thomson, president and CEO of Finning International. “For the balance of
the year, we expect healthy activity levels in Canada and continued challenging market conditions in South
America. Across the organization, we will remain focused on what we can control, namely managing costs
and improving capital efficiency to increase our return on invested capital.”
Revenues rose by 9% from the second quarter of 2013 to €1.4 billion, as higher revenues in Canada and
the UK & Ireland more than offset the revenue decline in South America. New equipment sales increased
by 20% driven by strong market activity in Canada and the UK & Ireland. Product support revenues grew
by 4%, mostly due to higher parts sales in Canada. Rental revenues and used equipment sales declined by
7% and 9%, respectively, and were lower in all operations compared to the second quarter of 2013.
Profit margin declined to 29.6% from 31.7% in the second quarter of 2013. The reduction in gross profit
margin was primarily due to the shift in revenue mix to lower-margin new equipment sales, particularly in
Canada. Consolidated new equipment sales comprised 44% of total revenue compared to 40% a year ago,
while the proportion of product support to total revenue declined to 47% from 50% in the second quarter
of 2013. In addition, lower revenues and gross profit from rental negatively impacted gross profit in all
operations.
Profits rose by 4% to €68 million reflecting growth in EBIT, which was partly offset by a higher provision
for income taxes. The effective tax rate was 24.1%, up from 15.8% in the second quarter of last year,
primarily due to the benefit from previously unrecognized tax losses in the second quarter of 2013, which
had a €0.02 positive impact on EPS. The current period effective tax rate continues to be impacted by the
devaluation of the Argentine peso.
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Backlog
The order backlog was €870 million at the end of June 2014, down from €1 billion at the end of March
2014, as deliveries outpaced order intake in the quarter, mostly in Canada. However, the current backlog
is comparable to the levels of June 2013. Order intake in Canada and the UK & Ireland was solid by
historical standards. In South America, order intake remained soft, reflecting slower mining activity in the
region.
Second Quarter 2014 Highlights By Operation
Canada
Revenues were up 21% as market activity was strong across most segments in Western Canada. New
equipment sales rose by 55%, driven primarily by mining deliveries, and were also higher in construction
and power systems. Product support revenues increased by 6%, reflecting higher parts sales in all sectors,
most notably in mining.
Profit margin declined compared to the second quarter of 2013 due to a significant shift in revenue mix
to new equipment sales (44% vs. 34% in the second quarter of 2013) and a higher proportion of mining
equipment and parts in the sales mix which typically return a lower margin. SG&A expenses increased
modestly despite strong revenue growth.
South America
Revenues declined by 10% (down 15% in functional currency - USD), and were lower in all lines of
business, impacted by softer market activity compared to the second quarter of 2013. New equipment sales
were down 27% in functional currency as a result of reduced demand for equipment, predominantly from
mining, but also from the construction sector. Product support revenue was down by 6% in functional
currency, impacted primarily by lower service revenues in mining as customers continued to focus on cost
reductions.
In response to slower activity levels, the South American operations made further reductions to its
workforce in the second quarter. Compared to the end of 2013, the number of employees in South
America is down by about 5% to under 7,000 people. The company continues to monitor market
conditions in South America closely to ensure that its cost structure and invested capital are aligned with
expected activity levels to maintain profitability.
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Invested capital was down by about €87 million from the first quarter of 2014, driven by reduced
equipment and parts inventory in response to slower demand.
United Kingdom & Ireland
Revenues rose by 21% (up 3% in functional currency - GBP) driven by new equipment sales, which were
up 11% in functional currency reflecting improved demand from the construction and plant hire sectors.
Product support revenues declined by 9% in functional currency, impacted primarily by softer demand
from coal mining and power systems. SG&A costs were similar to last year in functional currency despite
modest increase in revenues. Invested capital increased by £8 million from the first quarter of 2014, in line
with higher equipment inventory to meet improved demand for new machines.
Wacker Neuson 2nd Quarter Revenues Up 2%
Wacker Neuson reported a profit increase in the second quarter of 2014, with revenue remaining at the
same level as the previous year. The company reported revenue increased of 2% to €328.4 million for the
second quarter of, 2014, compared with €329.0 million for the prior-year period.
In the first six months of 2014 revenue grew by 6% to €620 million compared with €586.1 million the
previous year period, a new record high for the group. “We were able to further expand our market
position in Europe, boosting revenue here by 10%,” says Cem Peksaglam, CEO of Wacker Neuson.
“We also reported growth in North America. However, South America and Asia-Pacific developed below
our expectations due to falling demand and currency fluctuations.” The compact equipment segment
proved to be a key growth driver, with revenues increasing 13%.
Indonesian Heavy Equipment Companies Hope For Revival In 2015
Indonesian distributors of heavy equipment are optimistic business will pick up next year as demand is
expected to begin to recover on the back of the increase in infrastructure projects to be implemented by
the new government.
United Tractors hoped that the change in government would help revive the country’s economy, especially
the mining sector and construction business, the main markets for heavy equipment distributors.
According to the company, there is usually an upward sales trend after elections because usually there is
an increase in infrastructure or construction projects with the change in government. The increase would
begin in 2015 when the new government was able to fully implement its economic policy. Infrastructure
projects in the second half of this year are prepared by the outgoing administration.
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ISSUE 8 2014
President-elect Joko Widodo promised during his campaign that if elected, he would push up
development of infrastructure projects to ease distribution bottlenecks, which have caused a high-cost
economy. Most local heavy equipment distributors suffered weak sales in the first half of this year due to a
decline in mining operations and construction activities.
United Tractors is the subsidiary of conglomerate Astra International (ASII) that focuses its business
on distributing heavy equipment under the brands Komatsu, UD Trucks, Bomag, Tadano and Scania.
Komatsu remains the largest contributor to its sales and most Komatsu unit sales are to the mining sector,
followed by plantations, construction and forestry.
Data from United Tractors shows that sales of Komatsu heavy equipment jumped more than 70% to
5,404 units in 2010 from 2009. The reelection of President Susilo Bambang Yudhoyono in July 2009
had contributed to the increase in economic activities in 2010. The presidential election in 2004 had also
significantly contributed to the economy in 2005.
About 61.3% of sales went to support mining operations, 19.2% to agribusiness, 10.7% to construction
and the remaining 8.8% to forestry. The company said it would maintain a 3% to 5% growth target in
sales for the rest of 2014. Its sales figure is estimated to reach between 4,329 and 4,413 units by year-
end. In the first half, United Tractors has already sold 2,207 units and generated Rp 2.89 trillion (€194.3
million) from sales.
Meanwhile, Intraco Penta, another publicly listed heavy equipment distributor that sells heavy equipment
under the brands Volvo, Sino Truck, SDLG, Bobcat, Mahindra and Doosan — expects business players to
end their “wait-and-see” approach now that election has come to an end. Intraco investor relations head
Imam Liyanto said that the business would rely mainly on the implementation of the new administration’s
economic policy. If the new government emphasized more on infrastructure projects, it would certainly
boost demand for heavy equipment, he added.
CNH Industrial Expands Construction Equipment Production in Iowa
CNH Industrial N.V. announced it is investing €19 million to expand production in Burlington, Iowa,
with the addition of the company’s crawler dozer production line. The company is increasing its existing
presence in the city by adding the new production line to its manufacturing plant.
This expansion will create approximately 50 full-time jobs. Preparations will begin later this year and
production on the new line is expected to begin in the second half of 2015. The machines are currently
produced at the Calhoun, Georgia, plant which will close in the third quarter of 2015 as the company
adjusts its construction operations. Moving the production line to Iowa is consistent with CNH
25
ISSUE 8 2014
Industrial’s long-term strategy to optimize its manufacturing footprint and achieve a flexible industrial
operation that delivers best-in-class response to the CNH Industrial brands’ customers around the world.
The production transfer is contingent upon completion, and approval, of all State and local incentives and
grants.
The production facilities will include a new dedicated paint line, welding and computer numerical control
(CNC) machining equipment, and a dedicated assembly line. The Burlington plant, home to more than
600 employees, has manufactured equipment for CNH Industrial’s brands since 1937. In addition to
producing Case Construction Equipment, the plant’s employees produce agricultural equipment for the
company’s Case IH and New Holland brands.
Wajax 2014 2nd Quarter Revenues Up 3%, Profits Down 8.8%
Second Quarter Highlights
Consolidated second quarter revenues of €296.1 million increased €9.8 million, or 3%, compared to last
year. The Power Systems segment recorded an 18% increase in revenue over the previous year, primarily
on stronger power generation sales and improved off-highway activity in the western Canada oil and gas
sector. Revenue in the Industrial Components and Equipment segments were relatively unchanged from
the previous year.
Profits for the quarter of €9.7 million decreased 8.8% compared to €10.7 million recorded in 2013. The
lower earnings were mainly attributable to higher finance costs resulting from the increased cost of debt
related to the issuance of long-term senior notes in the fourth quarter of last year, as well as a slightly
higher income tax rate. Higher gross profit margins from improved parts and service volumes increased
Equipment segment earnings 4% over the previous year, to €10.8 million, despite a €0.4 million charge for
the closure of one and temporary shutdown of another British Columbia mining branch. Power Systems
segment profits increased 27% from 2013 to €3.3 million, on the increase in revenue, while Industrial
Components segment profits decreased 19% to €3.6 million, on higher selling and administrative costs.
Consolidated backlog at June 30, 2014 of €177.5 million increased €52.7 million, or 42%, compared to
March 31, 2014 on increases in all three segments.
Funded net debt of €172.6 million at June 30, 2014 was relatively unchanged compared to €172.2 million
at March 31, 2014.
The Corporation disclosed that it expects to take a restructuring provision in the third quarter of 2014 of
between €2.4 million and €2.8 million related to the Industrial Components segment. This provision will
26
ISSUE 8 2014
consist primarily of severance costs, as Industrial Components simplifies its sales organization. Annual
pre-tax cost savings as a result of this restructuring are expected to be approximately €4 million.
Outlook According To Wajax Management
Commenting on second quarter results and the outlook for the remainder of 2014, Mark Foote, President
and CEO, stated:
“As expected, second quarter earnings showed improvement compared to the first quarter of this year.
The Equipment and Power Systems segments each posted improved earnings compared to the previous
year despite a €0.4 million charge in the Equipment segment related to downsizing its branch operations
primarily due to a slow-down in British Columbia coal mining activity. In the Industrial Components
segment, trends continued to improve from the first quarter.
“We are pleased with our 42% increase in backlog over the first quarter and in particular with the
increased orders for oil sands related mining shovels.
“During the quarter we transferred accountability for the oil sands based rotating products group from the
Equipment segment to the Industrial Components segment and the impact of the transfer was reflected
in the segment results for the quarter and comparative periods. The change will allow for a stronger
foundation for operations in the oil sands by exploiting the engineering and repair services capabilities in
Industrial Components and provides a platform for future expansion into other Canadian mining markets.
We also announced plans to restructure and simplify the sales force at Industrial Components, which is
expected to result in improved sales team effectiveness and lower costs. We are very committed to growth
at Industrial Components with particular emphasis on the addition of products and value-added services
in support of our oil sands, mining and oil and gas customers.
“Heading into the third quarter, the outlook for our end markets and results for the full year, excluding
the expected restructuring provision, remains substantially unchanged from our view at the end of the first
quarter. While we continue to expect 2014 to be a challenging year, we are beginning to see encouraging
signs of increased capital spending from oil and gas customers and we are pleased with our oil sands
activity. Our increased backlog and the restructuring in the Industrial Components segment gives us
added confidence as we continue to make investments in our strategic growth initiatives. As a result, we
have maintained our monthly dividend at €0.16 per share, keeping to our guideline of paying out at least
75% of current year expected earnings.”
27
ISSUE 8 2014
Komatsu Purchases New York City Area Dealer
Edward Ehrbar, Inc. principals Patrick J. Ahern, President, and Matthew J. Ahern, Executive Vice
President, announced that they have entered into a definitive agreement to form a new business unit with
“Ehrbar” becoming an operating division of Komatsu America Corporation, Rolling Meadows, Illinois.
Ahern will continue to serve Edward Ehrbar, Inc. in their present capacities. Edward Ehrbar, Inc. will
continue to operate under its founding name.
Ehrbar, a leading metropolitan New York and lower Connecticut area heavy construction equipment
distributor established in 1903 is headquartered in Yonkers, New York with branch locations in Holbrook
Long Island, New York and Danbury, Connecticut.
“From the very beginning, our philosophy has been to develop and maintain close personal relationships
with our customers through a hands on approach. From the single machine owner operator to major fleet
installations, we plan the exact same approach into the future”, comments Pat Ahern. “With this new
association and its enhanced resources, Ehrbar is poised for accelerated growth in the rapidly changing
market place of the greater New York and Connecticut areas that we serve.”
Matt Ahern adds, “Ehrbar’s most valued assets are its people and our day to day customer comes first
philosophy that has spelled success for over 110 years. This formula and our association with Komatsu
for over 25 years as a distributor will provide for even greater and more efficient market coverage with an
expanded plan to provide enhanced services to our existing and future customer base.”
For Komatsu America Corporation, this is part of a strategic reinforcement of the distributor network.
Komatsu owns a number of its North American distributors or controls them through Japanese trading
company proxies such as Sumitomo and Marubeni.
Ritchie Bros. 2nd Quarter Revenues Up 11%, Profits Up 30%
Ritchie Bros. Auctioneers Incorporated announced profits of €30.5 million for the three months ended
June 30, 2014. This is a 30% increase compared to profits of €23.6 million generated in the same quarter
last year. The company’s auction revenues for the second quarter of 2014 increased 11% to €112.1 million
compared to €101.5 million for the same period in 2013, primarily as a result of an increase in gross
auction proceeds. Selling, general and administrative expenses, excluding depreciation and amortization,
for the second quarter of 2014 increased 2% compared to the same period in 2013. Profits for the quarter
also benefited from the effects of a favorable tax rate.
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ISSUE 8 2014
For the six months ended June 30, 2014, profits were €41.8 million compared to profits of €34.6 million
for the six months ended June 30, 2013, a 21% increase. The company’s auction revenues during the first
half of 2014 grew 4% to €190.1 million compared to €182.2 million in the first half of 2013.
“Our record second quarter revenue was bolstered by strong auction activity across North America -
especially in Canada. The mix and age of equipment sold at our auctions also continued to improve,
enhancing the average price per lot.” said Rob McLeod, Chief Financial Officer.
Ravi Saligram, Chief Executive Officer, added: “We’re pleased to see the level of growth in our auction
business, which we believe continues to have significant growth prospects. Over the next several quarters,
I look forward to focusing on how we can grow the Ritchie Bros. business and expand our market share by
further penetrating our existing markets, with particular focus on the U.S. and Europe. I am also excited
by our newly developed EquipmentOne solution, and plan to put a significant focus on evolving our
strategy to achieve its full potential.”
During the second quarter of 2014, the company conducted 68 unreserved industrial auctions in 14
countries throughout North America, Central America, Europe, the Middle East, Australia and Asia.
GAP was €940 million for the second quarter of 2014, a quarterly record for the company and a 15%
increase compared to the same quarter of 2013.
EquipmentOne, the company’s online equipment marketplace, contributed €23.4 million of gross
transaction value to GAP in the second quarter of 2014 compared to €23 million in the second quarter
of 2013. GTV is comprised of the value of the items sold on EquipmentOne and the fees earned through
EquipmentOne’s buyers’ premiums.
For the six months ended June 30, 2014, GAP was €1.7 billion, which is 9% higher than in the first half of
2013. EquipmentOne contributed €38 million in the first half of 2014 compared to €39.1 million in the
first half of 2013.
Revenues grew in the three- and six-month periods ended June 30, 2014 compared to the same periods in
2013 as a result of an increase in GAP. Revenue rates declined due to the performance of the Company’s
underwritten business. The Company’s revenue rate during the second quarter of 2014 was 11.54%, which
is consistent with the Company’s historical average, but a decrease from the 11.96% revenue rate achieved
in the same quarter of 2013. The Company’s revenue rate during the six months ended June 30, 2014 was
11.53% compared to 12.01% during the same period in 2013.
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ISSUE 8 2014
The Company’s underwritten business, which is comprised of guarantee and inventory contracts, represented 32%
of GAP in the second quarter of 2014, compared to 27% in the second quarter of 2013, and 29% of GAP in the
first half of 2014 compared to 24% in the first half of 2013.
Online bidding statistics
Ritchie Bros. sold approximately €664.3 million of equipment, trucks and other assets to online buyers during the
first half of 2014, a 17% increase compared to the same period of 2013. Online buyers represented 40% of GAP
during the first half of 2014. Internet bidders comprised over 60% of the total bidder registrations at Ritchie Bros.
industrial auctions in the first half of 2014.
Kobelco Equipment Revenues Up 14%
Kobelco reported sales of JPY 98.1 billion (€755.2 million) for the first quarter of the fiscal year which started
on April 1, a 14% increase compared with the same period last year. The company’s Cranes and Construction
Machinery divisions returned a combined pre-tax profit of JPY 9.2 billion (€71.2 million), a 155% improvement
on the first quarter of 2013.
The company said excavator sales were up in Japan with a last-minute buying increase ahead of a new tier of
emissions regulations and a rise in consumption tax. Kobelco said that demand slowed elsewhere in Southeast
Asia, but was alone among other manufacturers reporting results this quarter in saying excavator sales were up in
China compared to a year ago. Kobelco said it was also seeing growth in Europe and North America having reentered these markets following the end of its ten-year joint venture with CNH in 2012.
The company also saw robust growth in its crawler crane sales, with domestic demand in Japan surging on the back
of higher public investment, among other factors. It also said markets elsewhere in Asia were strong as were sales
in other parts of the world.
These factors contributed to a 155% overall rise in pre-tax profit for these two divisions, to JPY 9.2 billion (€71.2
million). This gave them an pre-tax margin of 9.4% compared to just 4.2% for the same period last year, when they
made JPY 3.6 billion (€26.2 million) in pre-tax profits on revenues of JPY 86.1 billion (€626.6 million).
Despite the growth in sales and profits, Kobelco has revised its full-year sales forecast downwards. It now expects
the two divisions to have revenues of JPY 406 billion (€3.1 billion) for the fiscal year compared to the previous
forecast of JPY 413 billion (€3.2 billion). However, this would still represent a +8.3% increase on fiscal 2013’s fullyear revenues of JPY 375 billion (€2.9 billion). The company did not elaborate on the reasons for this downward
revision.
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ISSUE 8 2014
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