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Manitowoc - Sell-Off Continues As Appeal Remains Limited


  • Manitowoc warns again, forecasting disappointing third quarter sales.
  • The warning will take a huge beating on the reported profitability of the business.
  • Given the disappointing operating performance and the leveraged position, I remain very cautious.

Manitowoc (NYSE:MTW) saw its shares continuing to fall after it warned again last week about disappointing sales results.

Shares have already lost some 45% from the highs of this summer as investors are very disappointed with recent revenue and earnings trends, combined with the leveraged position of the firm. As a result, I remain very cautious despite the big correction, having real concerns about the current state of affairs, lack of growth and the leveraged position.

Third Quarter Disappointment

Manitowoc pre-released its third quarter results which fell quite a bit short compared to expectations. The company anticipates to report third quarter sales of little less than $1 billion which compares to last year's reported $1.01 billion in sales. Analysts anticipated the company to post sales of roughly $1.02 billion for the quarter.

Earnings before interest expenses, amortization charges, restructuring charges and taxes are seen around $90 million which compares to the $112.4 million reported last year.

Net earnings for the corresponding period last year totaled $53 million, but those earnings will likely suffer largely as a result of the anticipated weakness.

Warning About Demand

The reason for the shortfall in anticipated sales and overall results is the challenged and constrained demand across the globe. Crane revenues were hurt by North American rough-terrain and truck markets as well as Latin America as well. The foodservice segment saw weakness in Russia as well as Asia-Pacific, on top of that.

Consequently, full year crane revenues are now anticipated to fall in the mid-to-high single digits compared to last year. Margins for the unit are seen around 7% on an operating basis.

Foodservice revenues are anticipated to increase by low-to-mid single digits on an annual basis with operating margins seen around 15% for the entire year.

A Quick Look Back At The Second Quarter

This article was written by

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Finding value that gets unlocked in M&A, IPOs and other corporate events
The writer is a long term value investor and M.Sc graduate in Financial Markets with over 10 years experience. Value can be found in both long and short ideas and uses options to enhance the risk-return profile of investment ideas. Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice.

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