Image source: Hyster-Yale.

The slowdown in the global economy has had effects throughout the industrial sector. Forklift specialist Hyster-Yale Materials Handling (HY -2.48%) isn't the best-known company in the stock market, but it plays a vital role in providing the forklifts that customers need in order to manage their supply chain needs. Competition from fuel-cell driven forklift producer Plug Power (PLUG -1.69%) has posed a long-term challenge to Hyster-Yale, which has led Hyster-Yale to develop its own fuel-cell technology through its Nuvera unit. Coming into Wednesday's fourth-quarter financial report, shareholders wanted to see signs of a long-term turnaround despite being ready to see drops in revenue and net income. The declines that Hyster-Yale posted were larger than many had expected, and that could put pressure on the company well into 2016. Let's look more closely at the latest from Hyster-Yale this quarter and whether it can get itself back in gear this year.

Hyster-Yale can't lift its load
Hyster-Yale's fourth-quarter results included some poor numbers. Sales fell more than 9% to $654 million, stunning investors who were already bracing for a 6% decline in the top line. Net income dropped a steeper 35% to $17.2 million, producing earnings of $1.05 per share. Yet that figure was $0.02 per share better than the consensus forecast among investors in the forklift maker.

Looking more closely at Hyster-Yale's results, the fundamental metrics of the business showed some of the challenges that the company has faced. Lift-truck operating profits slid by 9%, and new unit shipment fell by 1,300 from a year ago to 22,200. Bookings volume posted another big decline, falling 2,800 to 22,000 units, and the company pointed to a very large order that it received in 2014 that didn't recur in 2015. Backlogs fell to $660 million, which was down $50 million from a year ago but relatively consistent with Hyster-Yale's results last quarter.

Hyster-Yale's geographical results were mixed. The Europe/Middle East/Africa segment saw solid shipment growth of 350 units, but revenue fell 7% because of the strong U.S. dollar. Unit shipments in the Americas dropped by 1,300, again suffering from extremely weak conditions in the Brazilian market. The Asia-Pacific segment saw shipments fall 300 units, hurting revenue despite a shift in demand toward higher-ticket equipment.

Nuvera also continued to weigh on Hyster-Yale's overall results. The fuel-cell competitor to Plug Power reported a net loss of $3.5 million, which was consistent with its performance in past quarters. Going forward, Hyster-Yale can expect comparable losses year over year now that the Nuvera purchase is more than a year old.

What's next for Hyster-Yale?
Hyster-Yale's outlook for the forklift market in 2016 was fairly muted. The company said that a growing market in Western Europe should offset weakness in the Asia-Pacific region and moderating performance in the Americas. Higher operating expenses and an unfavorable product mix will likely result in lower operating profits and net income, however, even though Hyster-Yale expects unit volumes to rise. In particular, the first half of the year could be more challenging for the company than the second half.

Still, Hyster-Yale thinks it can fend off competition from Plug Power and gain market share in the forklift business. Between improvements in its warehouse operations, boosting its independent distribution network, strengthening sales and marketing efforts, and providing lowest-cost equipment, Hyster-Yale has its eyes set on becoming a bigger player in the industry.

Moreover, a recent acquisition could help Hyster-Yale. Earlier in the week, it said that it would acquire Italian company Penta Holding, which holds a majority stake in forklift-attachment manufacturer Bolzoni. The deal cements a relationship that the two companies have had for years, and Hyster-Yale CEO Colin Wilson said that Bolzoni's unused capacity could help Hyster-Yale implement its overall strategic growth vision, giving it a further competitive advantage against Plug Power.

Shareholders didn't immediately respond to Hyster-Yale's results following the afternoon announcement, but the big decline in overall revenue could generate further pressure on its share price in the near term. Looking further down the road, Hyster-Yale's acquisition of Bolzoni has some growth potential, but the company needs to work hard to fight against adverse economic trends and find ways to grow.