Two things in construction equipment maker Terex's
Construction: roadblock and recovery
2011 was a tough year for Terex's construction business, as the company had to upgrade products to meet the tier IV emission standards. In fact, all players in the industry, including equipment king Caterpillar
But what's really heartening is to see signs of a strong bounce-back. Terex not only narrowed losses to $2.8 million from $4.3 million in the year-ago period -- sales also rose a solid 29%. An uptick in U.S. construction activity has been driving up demand for construction equipment and cranes, as evidenced by the 40% jump in Manitowoc's
Europe into the play
The interesting part is, rising demand from Europe played a key role in not just revving up Terex's order book, but also its sales during the quarter. To top that, Terex is downsizing operations in its European construction businesses and hiking prices, initiatives that should ensure that its construction segment gets back on track soon.
Terex has considerable European exposure, and things might not be so bleak in the region after all. In fact, Caterpillar reported increased orders from European dealers during its fourth quarter, and is expecting sales from the region to climb up this year.
A few months back, when Terex acquired European-based Demag Cranes, some people were skeptical about the timing of the deal. But, now, it looks like the move couldbe hugely transformative for Terex. Apart from broadening its product range, Demag will also help Terex gain a stronger foothold in developing nations.
The Foolish bottom line
So does it really matter if Terex's bottom line is still in the red? The company is generating solid revenue (a 47.5% jump in the fourth quarter), cutting operating costs, and expanding.
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Neha Chamaria does not own shares of any of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.