EUR 850.00 For Business Accounts Only

Morningstar | While streamlined operations don't build a moat, they do allow the company to crane to new heights.

Terex’s historical portfolio of assets came from an array of acquisitions with seemingly few synergies over the past few decades, and a disparate collection of distribution relationships that consist of dedicated dealers, unaffiliated distributors, rental companies, and direct sales. With several divestitures completed and product lines exited, Terex is now left with three primary business units that manufacture cranes, aerial works platforms, or AWPs, and materials processing, or MP, equipment. While the retained business units command top-tier industry positions, and even more important, are largely profitable, Terex's crane business is better defined as both highly cyclical in nature and challenged by low-cost producers. The unit generates nearly 30% of revenue for Terex. To better compete within this competitive framework, management has sought to shift the unit's manufacturing base to low-cost regions, consolidate manufacturing and distribution centers, as well as utilize the historical premium Demag brand. Combined, we believe that these measures will help reduce the break-even costs and allow it to compete more effectively globally. The aerial works platform and materials processing divisions each sport steadier revenue and operating margins profiles compared with the crane unit. Historically, the AWP segment has been the gem of the company, ranking second globally behind Oshkosh's JLG. The unit contributes nearly 50% of total revenue, and more impressively, around 70% of operating income. The unit's various product offerings are primarily geared toward the residential and nonresidential construction markets. Management's main strategy for the unit is not to restructure it, rather to maintain the company’s leading industry position with continued product innovation and improved end-market distribution. Materials processing primarily manufactures equipment for niche end markets tied to public works, recycling, and natural resources. Management's goal for MP is to utilize its specialized dealer network for product and service innovations, sustaining its competitive profile.