Hyster-Yale Materials Handling (NYSE:HY) relies on the industrial economy for the success of its forklift business, and prospects for the industrial sector have looked more favorable in recent months. That has lifted interest in the stock, and coming into Tuesday's fourth-quarter financial report, Hyster-Yale investors wanted to see a nice pickup in sales even as they prepared for declines in earnings. For its part, the forklift manufacturer's results weren't quite as good as investors had hoped, with sluggish revenue growth and a bigger drop on the bottom line than expected.

Let's take a closer look at Hyster-Yale to see how it did during the quarter and what's next for the forklift maker.

Workers with forklift trucks.

Image source: Hyster-Yale.

Hyster-Yale posts mixed results

Hyster-Yale's fourth-quarter results were solid, even though they left something to be desired for most of those following the stock. Revenue rose 7% to $690.6 million, bouncing back from a year-over-year decline last quarter despite falling about a percentage point short of the growth rate that investors had wanted to see. Net income, however, dropped nearly 30% to $12.2 million, and the resulting earnings of $0.74 per share missed the consensus forecast among investors for $0.87 per share.

Looking more closely at the report, Hyster-Yale's operational metrics were generally favorable. Unit shipments of lift trucks worldwide climbed to 22,900, up 700 from year-ago levels. Bookings were 100 units weaker than a year ago at 21,900, but the dollar value of those bookings rose $20 million to hit $530 million. Worldwide backlog of 29,600 units worth $710 million was up 2,700 units and $50 million from the fourth quarter of 2015, although it was down slightly from third-quarter figures. As we've seen in past quarters, however, operating profit for the key lift truck segment was down 40% for the quarter, and segment net income was down about 12%.

Hyster-Yale's geographical regions showed mixed results. The Americas region was once again the weakest, posting sales declines of 2% as shipments of certain classes of lift trucks weighed on the top line. Deal-specific pricing in North America also held back segment revenue, and lower gross profit and higher overhead expenses caused a decrease in net income for the region. However, Europe, the Middle East, and Africa bounced back with a 10% revenue gain, and operating profits rose sharply due to higher shipments of various types of lift trucks. Asia-Pacific revenue fell slightly, and modest operating losses stemmed in part from currency headwinds and partly due to income tax benefits from the previous year.

Elsewhere, Hyster-Yale's other businesses also showed mixed performance. Attachment-specialist Bolzoni posted net income of $1.6 million, but fuel-cell subsidiary Nuvera reported a net loss of $7.6 million on just $600,000 in revenue.

Can Hyster-Yale get a lift in 2017?

Hyster-Yale's guidance for the coming year was highly dependent on regional conditions. In the Americas, Hyster-Yale thinks that a recovery in Brazil could help offset weakness in North America, and it expects to ship more lift trucks and post revenue gains that should in turn lift operating profit. The Eastern and Western European markets are expected to post modest overall growth over the course of the year, but the Middle East and Africa could pull overall growth down. Still, Hyster-Yale expects to grow share, especially in the early part of the year. Asia-Pacific revenue and operating results should improve even in a relatively flat market, with weakness in the first half giving way to improvement in the second half of the year.

Hyster-Yale is also looking at new products in several key segments. The ongoing rollout of standard Class 5 lift trucks and the European pedestrian pallet stacker began late last year and will continue, and a new lift truck specializing in handling high-volume applications should come out early in the second quarter of 2017. Bolzoni should see solid revenue, and Nuvera will hopefully reduce its net loss for the year.

Fundamental prospects for Hyster-Yale look relatively favorable, and investors have reaped rewards in their positions since November. Yet to succeed fully, Hyster-Yale will have to keep innovating and make the most of the market opportunities it has worked so hard to develop. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.