Manitowoc Sells Interest in Chinese JV

In order to better align resources across its crane segment and to improve its financial performance, The Manitowoc Company, Inc. (MTW) announced the sale of its 50% interest in its Chinese joint venture Manitowoc Dong Yue Heavy Machinery Co., Ltd. The sale made to its partner, Tai’an Taishan Heavy Industry Investment Co., Ltd., is expected to have a negative impact of $36 million on Manitowoc’s net income for fiscal 2013.

In 2008, Manitowoc entered into the joint venture with the shareholders of TaiAn Dongyue Heavy Machinery Co., Ltd. for the production of mobile and truck-mounted hydraulic cranes. The joint venture is located in TaiAn City, Shandong Province, China, approximately 300 miles south of Beijing. Founded in 1972, TaiAn Dongyue is a major player in the Chinese mobile hydraulic crane segment.

The company, however, remains committed to the Chinese construction equipment market, and will keep developing its tower crane business in China. In addition, the company is focused on boosting its wholly owned Potain tower crane operation at its state-of-the-art manufacturing facility in Zhangjiagang, which supplies best in class products to China, the Greater Asia/Pacific region, Latin American and the Middle East markets.

Manitowoc is expected to release its fiscal 2013 results on Jan 30, 2013. For the fiscal year, Manitowoc expects mid single-digit revenue growth in the Crane segment and modest single digits improvement in Foodservice revenues. The company expects high single-digit improvement in operating margins in the Crane segment and mid-teen gains in the Foodservice segment.

Going forward, Manitowoc’s crane demand is expected to increase, supported by the launch of new products and a turnaround in the construction sector. Additionally, the Foodservice segment will be assisted by new manufacturing facilities, restructuring initiatives and new products. However, high debt levels and increasing competition will be headwinds.

Currently, Manitowoc carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Terex Corp. (TEX), Zebra Technologies Corp. (ZBRA) and Columbus McKinnon Corporation (CMCO). While Terex and Zebra Technologies hold a Zacks Rank #1 (Strong Buy), Columbus McKinnon carries a Zacks Rank #2 (Buy).