JLG sales up 30.4% but profits hit by cost cutting charges
By Lindsey Anderson28 January 2011
JLG Industries' aerial platform and telehandler sales rose 30.4 percent to $290.6 million for the final three months of 2010 but the division reported an operating loss of $16.7 million because of a big reduction in inter-company defence sales and charges on new cost reduction actions in Europe.
In the same quarter in 2009 JLG made a $13.3 million operating profit. Oshkosh said the fall in profitability was the result of greatly reduced sales of higher margin military equipment to its sister Oshkosh defence business - down from $530.8 million to $36.7 million - and $11.3 million in charges linked to cost reduction actions in Europe (see separate story).
The increase in sales was credited to the replacement of aging fleets in North America, economic growth and increased product adoption in emerging markets, as well as increased demand for military telehandlers.
Oshkosh said that despite the replacement activity in North America, sales remained significantly lower than historical levels in North America due to tight credit and a weak construction market.
Oshkosh continues to benefit from orders for its defense-related products that are used by the US Military. The company recorded net sales of $1.7 billion (down from $2.43 billion in 2010) and repaid $115.1 million in debt.
"In the first quarter, we began our transition from high volume production of MRAP-All Terrain Vehicles (M-ATVs) to the gradual launch of production of the US Army's Family of Medium Tactical Vehicles (FMTVs)," said Charles L. Szews, Oshkosh Corporation president and chief executive officer.
"This transition will challenge our quarterly earnings comparisons in fiscal 2011, but we expect to be solidly profitable in every quarter this fiscal year. Beyond fiscal 2011, we have good visibility in our defense business with several programs of record and a recovering access equipment business."
Szews said Oshkosh will position itself to return to a period of growth beginning in fiscal 2012 and the company is working on launching new products at the beginning of the second fiscal quarter.
"We are investing globally and taking other actions to capitalize on what appears to be a gradual global economic recovery," he said. "In addition, we are continuing our focus on debt reduction, achieving $115.1 million in the first quarter, to create more options for growth."