Terex shares fall on 3Q profit decline, 4Q outlook

posted: 36 DAYS 7 HOURS AGO

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HARTFORD, Conn. -Shares of Terex Corp. fell Thursday, a day after the heavy equipment maker posted a bigger-than-expected third-quarter loss as the company dealt with reduced demand and incurred charges to close and consolidate facilities and reduce its work force. The company also said it is unlikely it will be profitable in the fourth quarter.

Terex and other heavy equipment makers have been struggling with reduced sales during the recession. Terex has responded by reducing production capacity and costs. Most of the company's factories operated on reduced schedules and worked on build-to-order to reduce inventory during the quarter, said Terex President and Chief Operating Officer Tom Riordan.

Poor demand and restructuring costs led the Westport, Conn., company to report a loss of $103.1 million, or 95 cents per share, compared with a $93.8 million profit, or 96 cents per share, in the same quarter last year.

Analysts surveyed by Thomson Reuters expected, on average, a loss of 34 cents per share.

Revenue for the quarter ended Sept. 30 was $1.23 billion, down 51 percent from $2.51 billion in the third quarter of 2008.

Shares fell 76 cents, or 3 percent, to $22.83 in morning trading.

Results included after-tax charges of about $19 million, or 18 cents per share related to the restructuring and continued production cuts.

Ron DeFeo, chairman and CEO, called it a "disappointing quarter," but said there are signs that "certain markets have stabilized, and even a few signs that point to growth."

"We are continuing to aggressively reduce costs as our business will be roughly half the size in terms of net sales than it was in 2008," he said. The company has cut so deep that its capacity may be "a bit too low" in some specific product categories, Riordan, the company's operating chief, said.

Terex said it expects sales this year to decline by about 50 percent from 2008 — to $4.9 billion — due to weak global markets and poor access to credit.

The company said its restructuring will lead to improved results for the fourth quarter, but because of weak demand for machinery, Terex said it is unlikely it will be profitable, excluding charges related to restructuring in the fourth quarter. Analysts expect a fourth-quarter loss of 25 cents per share.

Analyst Charles Brady of BMO Capital Markets said in a note to clients late Wednesday that because orders fell in all four business segments, he continues to forecast weakness through at least the first half of 2010.

He maintained his "Market Perform" rating on the shares saying that visibility into 2010 is poor and that there is risk earnings could fall more.

2009-10-22 10:45:20