We reiterate our Neutral recommendation on
Manitowoc Company, Inc.
). The company's first-quarter 2012 revenues and earnings missed
the Zacks Consensus Estimate.
The company reported adjusted earnings of a penny per share,
falling behind the Zacks Consensus Estimate of 9 cents. Total
revenue increased 17.5% year over year to $860.1 million, missing
the Zacks Consensus Estimate of $866 million.
The company expects crane revenues to grow in the range of
10%-15% year over year, while foodservice revenues are likely to
grow at a high single-digit clip.
Manitowoc's Crane segment expanded its portfolio, in 2011, with
the introduction of numerous innovative products, including Grove
RT9150, the world's largest rough terrain crane. Grove RT9150
became a leader in the construction and maintenance applications in
the energy and infrastructure end markets.
In addition, the National NBT 55 became the leader in the
oilfield service applications, especially natural gas. Another
product, the Grove GMK6300L has a strong demand in the heavy
construction and crane rental industry.
These products will help Manitowoc retain its market leading
position. The company also plans to introduce new products in 2012,
thus further augmenting the portfolio.
The company registered a 16% year-over-year increase in backlog
to $931 million in the first quarter, marking the highest backlog
level since the recession in the Crane segment. Orders also
improved 10% year over year to $675 million. Growth in the
Americas along with the emerging markets helped orders to ramp up
in the first quarter.
Manitowoc has recently opened a new production facility called
the Passo Fundo facility in Brazil, supporting the energy and
infrastructure activities in Latin America. The facility started
manufacturing rough-terrain cranes in April. With this, Manitowoc
became the first global crane manufacturer of rough-terrain cranes
in Latin America.
However, Manitowoc is not the sole company to start
manufacturing rough-terrain cranes in Brazil. Recently,
) has also started to build and supply indigenous rough-terrain
cranes in Brazil. Terex has plans to expand in the Latin American
regions including Brazil by increasing its manufacturing
Manitowoc has also introduced a number of new products in the
Foodservice segment. These products included Indigo ice machine and
Blend-in-Cup products which won recognition and awards from
) for sustainable performance.
The Foodservice segment is experiencing strong demand in North
America as well as in Europe. The company also plans to deploy
resources in the emerging markets of China through establishing new
stores and introducing new menu. Manitowoc also opened a new test
kitchen in India.
Besides Latin America, Manitowoc also faces growing competition
from a number of crane manufacturers in the Chinese market.
Privately held companies like Zoomlion, Sany and Fushun Excavator
also steeped in the cranes market as increase in demand in the home
market encouraged the entrance of these manufacturers.
Manitowoc, therefore, must grow its market share in the emerging
economies encompassing Latin America and China to maintain its
leading position in these regions.
Further, the construction market is recovering slowly and demand
for public as well as private sector construction is expected to
remain weak for the balance of the year. Therefore, sluggish
construction market may weigh on the Crane segment, which may face
challenges in getting orders.
Our recommendation on Manitowoc is in line with a short-term
Zacks #3 Rank (Hold).
MCDONALDS CORP (MCD): Free Stock Analysis
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