Forklift Industry Report – 2014 Q3

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Warehouse Forklifts

 

  • Global forklift market growing, but growth has been slowing through the year.  Worldwide forklift sales increased by 9.7% in Q1, 8.9% in Q2, and 6.4% in Q3. (from KION)
  • Outlook remains positive and most manufacturers expect growth at the least through the end of the year.
  • US GDP grew by 3.5%, while the IMF lowered world economic growth to 3.3% from 3.4%.

Worldwide new fork truck volume grew to 818,600 units in the first 9 months of 2014. At this time last year worldwide volume was at 752,000 units.  North America has seen an increase of 5.7% to 155,200 units for the first 9 months of 2014.

The Industrial Truck Association released its figures for North American new fork truck shipments in 2013.  The total shipments rose by 12.4% from 2012 to a total of 172,073 units. If North America continues on a similar pace for the remainder of 2014 we could see total North American shipments approaching 200,000 units, which will be very close to an all time high (source: Jungheinrich and ITA website).

By segment, worldwide demand of counterbalanced electric forklifts grew by 14%, while demand for forklifts with internal combustion engines grew by 6% year over year (source: Jungheinrich).

Highlights from Quarterly Reports

Hyster-Yale Materials Handling (world’s fourth largest forklift manufacturer)

  • Revenue increased 8.1% in the third quarter of 2014 over the third quarter 2013.
  • Revenue rose 1.6% from the second quarter 2014.
  • Revenue is up 5.5% during the first 9 months of 2014 compared with the same period in 2013.
  • Worldwide new unit shipments increased to 21,721 units in the third quarter 2014 from 21,176 in the same period last year.
  • The backlog of new orders fell from 28,800 units as of June 30, 2014 to 26,800 units as of September 30, 2014. At this time last year the backlog was 28,400 units.

Jungheinrich (world’s third largest forklift manufacturer)

  • Incoming orders rose by 12% in the third quarter. Overall 11% increase in incoming orders for the first 9 months of 2014 versus the same period last year.
  • The world material handling market grew by 9% in the first 9 months of 2014 compared to the first 9 months of 2013.
  • Worldwide new truck orders grew by 14% (not just Jungheinrich).
  • Jungheinrich is expecting moderate worldwide economic growth.

KION Group (Linde, STILL, Fenwick – world’s second largest forklift manufacturer)

  • Order intake is up by 9%.
  • Revenue is up 1.7% in the first 9 months of 2014 compared to the same period in 2013.
  • Rental and used equipment had significant year over year gains.
  • Linde Material Handling market segment increased market share in Europe and North America.
  • Revenue fell slightly from 2nd quarter 2014.

Toyota Industries (Toyota Material Handling – world’s largest forklift manufacturer)

  • Material handling segment up 13%.
  • Increase in sales in Japan, North America, and Europe.
  • Limited quarterly reporting for material handling market segment.

Ritchie Bros. Auctioneers – courtesy of Longbow Research

Ritchie Bros. is the largest industrial equipment auctioneer in the world and operates through 44 permanent and regional auction sites worldwide. The company holds 4-5 auctions per year on average at each of its permanent auction sites and its auctions are all unreserved which means that each item sells for the highest bid with no minimum price reserves.

  • The company’s gross auction proceeds (GAP) increased 12% in the third quarter 2014 compared to the same period in the prior year. Gross auction proceeds in 3Q14 were $887 million, which marks the highest third quarter total in company history.
  • Ritchie Bros. expects overall GAP to increase 2-3% in the fourth quarter; however, it noted that GAP declined 1% in the month of October on a year-over-year basis.
  • There were a total of 10,500 consignors (sellers) of equipment at Ritchie Bros.’ auctions during the third quarter compared to 10,300 in the same period last year.
  • The company had 24,200 unique buyers who purchased equipment through a Ritchie Bros. auction in the third quarter, which is over a 4% increase compared to 3Q13.
  • Ritchie Bros. has increased the number of its territory managers (a key driver of equipment volumes) by 8.8% since the beginning of 2014.

United Rentals – courtesy of Longbow Research

United Rentals is the largest equipment rental company in the world and has 882 locations across North America. The company generates 55% of its total sales from industrial/non-construction markets, 41% from non-residential construction, and 4% from residential.

  • United Rentals reported that its rental revenue increased 15.6% year-over-year in the third quarter, which was driven by strong volume growth and a 4.7% rental rate improvement.
  • The company indicated that rental strength continued into the month of October as rental rates were up 50 basis points through the first half of the month compared to the first two weeks of September and time utilization is up 160 basis points versus the prior year period.
  • United Rentals achieved time utilization of 71.5% in 3Q14 compared to 70.8% in 3Q13.
  • The company reaffirmed its 2014 total revenue guidance range of $5.55 billion to $5.65 billion, but raised its free cash flow guidance to $475M-$525M ($450M-$500M prior).
  • Rental fleet time utilization for the full year is still expected to be 68.5%, which is slightly above the company’s record 68.2% time utilization reported in 2013.
  • The size of the company’s rental fleet was $8.61 billion (based on original equipment cost) at the end of third quarter 2014 compared to $7.96 billion at the end of 3Q13.

Economic Data

US GDP

Gross domestic product in the US grew by 3.5% in the third quarter of 2014 (early estimate and likely to change).  This is compared to a 4.6% gain in the second quarter of 2014. Consumer spending increased 1.8% in the third quarter versus a 2.5% increase in the second quarter of 2014.  Business investment saw a similar change, and exports slowed as well.

Bureau of Economic Analysis

US-GDP-Q3-2014-Pic

 

 

US Industrial Output

Industrial Production grew at an annual rate of 3.2% in the third quarter of 2014. Manufacturing production rose at an annual rate of 3.5% during the quarter and mining output rose 8.7%.  At the end of September 2014, total industrial production was 4.3% higher than at the same point last year.

Industry News for the Quarter

  • Crown Equipment Corporation is now manufacturing engines in Ohio. Crown is known for their electric forklifts, but began building internal combustion lift trucks a few years ago.  Now they are also building the engines for those forklifts. Crown press release.
  • Toyota Industries is establishing a wholly owned financing subsidiary, called Toyota Industries Global Commercial Finance, that will be based in the US. This company will be focused on “globally expanding its sales finance operations for materials handling equipment.” Toyota press release.
  • Crown Equipment Corporation purchased JH Ryder, Canada’s largest privately owned Crown dealership. JH Ryder press release.
  • Mitsubishi Caterpillar Forklifts expanded its Houston production facility to accommodate 10,000 more units per year.
  • UniCarriers, manufacturer of TCM and Nissan forklifts, acquired New England Industrial Trucks, a Nissan, Cat, and Mitsubishi dealership.  NEIT will no longer sell Cat or Mitsubishi forklifts. UniCarriers press release.
  • United Rentals was added to the S&P 500 Index on September 19, 2014.
  • Ritchie Bros. announced that its annual Florida February auction will be held in Orlando on February 16-20, 2015. This is the company’s largest auction of the year and historically accounts for over 20% of Ritchie Bros.’ total first quarter gross auction proceeds.

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