In sync with its efforts to simplify the company structure, systems and footprint in a bid to improve efficiency and enhance global competitiveness, Terex Corporation TEX has completed the previously announced sale of its Material Handling & Port Solutions (MHPS) segment. The segment has been scooped up by Finnish company, Konecranes Plc for $595 million and €200 million in cash and 19.6 million newly issued class B shares representing a 25% interest in Konecranes.
The sale of the MHPS business represents a significant strategic shift in Terex’ business away from universal, process, mobile harbor and ship-to-shore cranes. The company is simplifying its organizational structure and continues to make progress on refocusing portfolio. In Oct 2016, Terex completed the sale of its German compact construction business to Yanmar for $60 million in cash. Included in the sale was the manufacturing facility located in Crailsheim, Germany, and parts distribution center located in Rothenberg Germany.
Following the sale of the construction and the Material Handling & Port Solutions (MHPS) businesses, Terex will be a more focused company, centered on three segments: Aerial Work Platforms (AWP), Cranes, and Materials Processing (MP). The transactions will help the company to focus on businesses that can consistently deliver returns in excess of cost of capital.
Additionally, it is reviewing all aspects of cost structure and has been taking actions throughout the entire company to reduce costs. Savings from these actions will help negate challenging conditions in the global crane markets. The company is also moving forward with the evaluation and simplification of its manufacturing footprint with eight closures announced in 2016. Further, Terex's performance is likely to be bolstered by continued traction in new and innovative products.
TEREX CORP Price
TEREX CORP Price | TEREX CORP Quote
Joy Global, Inc. JOY which belongs to the same sector as Terex has implemented several strategies to optimize cost structure and realign production capacity to cope with sluggish customer orders. Further, the company has decided to monetize its non-core assets to strengthen its operation and financial position. Its target is to sell non-core assets in the range of $40 million to $50 million in fiscal 2016.
Another industrial products sector stock, The Manitowoc Company, Inc. MTW has successfully completed the spin-off of its Foodservice segment and made great strides related to its transition to a stand-alone Crane business.
In the past six months, Terex has outperformed the Machinery-Construction/Mining subindustry. Terex’s shares have surged 63% over the said timeframe, much ahead of the industry’s gain of 28%.
Terex currently carries a Zacks Rank #3 (Hold).
A better-ranked stock in the same space is Actuant Corporation ATU, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Actuant generated a positive average earnings surprise of 11.47% in the trailing four quarters. Its earnings estimates have gone up 8% in the last 30 days.
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