Terex looks for internal growth and strong margins
Ron DeFeo is in typically bullish mood concerning future performance at Terex
Terex Corporation chairman and CEO Ron DeFeo is predicting strong growth over the next three years, with the aim of US$10bn revenues by 2015, up from $7.3bn in 2012.
However, unlike so often in the past, he is not looking for acquisition but to develop the existing business. Indeed, the company has recently sold off much of its road construction business, as it was struggling to expand that division.
“The opportunity for us to achieve great things is within our own operational control,” he said, during a speech at bauma 2013.
“Our focus today is on operational improvements. Do not expect Terex to make major acquisitions, we don’t need another acquisition to grow the company. I am not here on a shopping trip. The company, in 2015, will see $10bn in revenues and will achieve $1bn in profits without acquisitions. It is possible in the next several years that the company will also be totally debt free.”
Unlike many manufacturers, Terex is not trying to be all thing to all people and will focus increasingly on market sectors with less competitors, rather than having a machine for every site.
“We are not looking to be a Caterpillar or a Volvo, a full-line manufacturer. We are looking to be the most responsive company in the market sectors that we are in,” said DeFeo.
In 2012, 27% of the firm’s $7.3bn revenues came from crane sales, while 23% were related to materials handling equipment. Construction equipment accounted for 18% of sales with aerial work platforms at 23%. Materials processing machinery – crushing and screening – made up 9% of revenue.
The AWP business is one of the big strengths for the coming years, with revenues expected to grow from $1.7bn last year to $2.9bn in 2015.
Construction, by comparison, will grow from $1.3bn to $1.4bn.
The crane business will rise from $1.9bn to $2.6bn, with materials handling and port solutions expanding from $1.7bn to $2.2bn in 2015. Lastly, materials processing will grow from $0.66bn last year to $1bn in terms of sales.
One area where Terex will continue to look for opportunities is in cooperation with other manufacturers. The company already has strong joint venture relationships in China and Russia and has recently agreed to badge a range of eight skid steer loaders to be sold under the Takeuchi name in the North American market.
“OEM relationships can be a productive source of growth,” said DeFeo. “There are too many manufacturers. Partnerships with other manufacturers spread the risk.”
The company is also investing internally, having recently spent €3.5m on its truck building plant in Scotland. It also announced further investment in its Northern Ireland operations.
“We are committed to this business. We are in the process of looking at building a new crushing and screening manufacturing site in Northern Ireland,” said DeFeo.