Second Quarter 2016 – Forklift Industry Report

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2nd Quarter 2016 Forklift Industry Report

Economy Snapshot and Forklift Market

Although the Brits decided being in the European Union wasn’t as fun as it used to be, the New York Stock Exchange still rose 2.64% from the first of April to the end of June this year.  And the price per barrel of Brent Crude Oil went up 28.5% in the second quarter. Not bad for seeing the number 2 financial center in the world (London) say no thanks to being part of the largest consumer market (Europe) by population on the planet.

For forklifts, in the first half of 2016 the world material handling market grew by 3%, with the European market providing the lion’s share of that growth at 13%.  Demand in China was up 3% and demand in North America was down 1%.  Brazil’s death spiral continued as that country hashes out what to do with all of its top politicians that were too busy giggling to themselves with all the money they were making from oil graft to worry about their jobs and the citizens of Brazil.

Across the forklift classes, demand for internal combustion engine forklifts in North America was down the lowest, by 8%, in the second quarter.

KION Group

  • KION’s revenues were up 8.3% in the second quarter of 2016 versus the same period last year. Sales in the first half of the year are up 5.9% overall for KION.  Net income for the quarter rose 21.9% and 2.9% for the first six months.
  • KION’s revenue in the Americas segment rose 0.7% in the second quarter and is up 3.0% for the first six months.
  • KION purchased Dematic, an automation provider and specialist in supply chain optimization.
  • KION is maintaining the performance outlook for 2016 that it set in 2015 based on strong performance so far this year.

Hyster-Yale

  • Revenue for the quarter dropped to $645.6 million, or 1.99%, from $658.7 million in the same period last year. And the first half of the year is down to $1,249.8 million, or 2.4%, from $1,281 million last year. Net income is down even more, falling 63.6% in the second quarter of 2016 versus the same time last year. And net income so far this year has dropped 50% compared to last year.
  • Revenues were down on lower unit volumes and from fewer sales of higher priced lift trucks. Low gross profit and higher selling, general and administrative expenses led to the lowered net income.
  • Total new lift truck shipments have been rising elsewhere in the Americas but are down overall because of Brazil. Hyster-Yale expects the Americas market to “decline moderately” compared with the same period in 2015. The company expects lower demand from industrial customers and a shift to sales of forklifts with a lower price tag and a thinner margin.
  • Hyster purchased the Italian lift truck attachment manufacturer Bolzoni during the second quarter.

Jungheinrich

  • Unlike performance in the Americas, European lift truck sales have been up. Jungheinrich’s sales jumped 12.4% this quarter versus last year, and sales so far this year are up 10.1%.  Net income for the quarter was 23% over the same period last year and 14.2% for the first half of the year. Jungheinrich does not expect Brexit to have a major impact on the company’s sales.
  • Jungheinrich expects worldwide lift truck demand to rise slightly in 2016 and is lifting its forecasts for incoming orders.

Toyota Forklifts – first quarter Fiscal Year 2017 results (limited details for forklift sales)

  • Toyota’s material handling segment’s revenue decreased 5% because of exchange rate fluctuations although unit sales of forklifts were up overall because of increases in North America and Europe.

Ritchie Bros. Auctioneers – Courtesy of Longbow Research

Ritchie Bros. is the largest industrial equipment auctioneer in the world and operates through 45 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 core auction sales are all unreserved, which mean that each item sells for the highest bid with no minimum price reserves.

  • The company’s gross auction proceeds (GAP) increased 1.1% in the second quarter 2016 compared to the same period in the prior year (+3.3% on a constant currency basis). Ritchie Bros. noted that core industrial auction volumes were up 15% in the quarter, but largely offset by lower equipment pricing and asset mix.
  • Ritchie Bros. sold 110,500 lots during the quarter compared to 96,000 lots in the prior year period, which represents 15% volume growth. The increase was driven in part by a 56% increase in transportation lots and a 31% rise in light construction assets sold.
  • There were a total of 15,050 consignors (sellers) of equipment at Ritchie Bros.’ auctions during the second quarter, which was 11% higher than the same period last year.
  • The company had 38,400 unique buyers who purchased equipment through a Ritchie Bros. auction in the second quarter, which is an 11% increase compared to 2Q15.
  • Ritchie Bros. cited a meaningful decline in equipment prices during the month of June; however, the company noted that July and August pricing appears to be stabilizing.

United Rentals – Courtesy of Longbow Research

United Rentals is the largest equipment rental company in the world and has 895 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 overall rental revenue decreased 1.3% year-over-year in the second quarter. Notably, the company’s rental rates decreased 2.4% versus the prior year. On the positive side, rental rates in May and June increased 50 basis points and 60 basis points, respectively, on a month-over-month sequential basis.
  • The company achieved time utilization of 67.5% in 2Q16 compared to 66.6% in 2Q15. Additionally, United Rentals reported that its time utilization was up 70 bps through the first three weeks of July compared to the same time period in 2015.
  • The size of the company’s rental fleet was $8.94 billion (based on original equipment cost) at the end of second quarter 2016 compared to $8.73 billion at the end of 2015. The age of the rental fleet was 43.4 months on an OEC-weighted basis at June 30th, 2016.
  • United Rentals also reaffirmed its 2016 financial guidance (maintained its total revenue and EBITDA outlook), but raised its rental rate outlook to a decline of 2-3% for the full year compared to its previous expectation of a 3-4% decrease. However, United now expects time utilization of 68.0% in 2016 (68.3% prior; 67.3% in 2015) which is offsetting the better rate outlook.

Other Industry News

  • JM Equipment has been appointed an authorized Clark dealer in the metro markets of Fresno, Bakersfield, Santa Maria and Merced, California.
  • Jungheinrich won two International Forklift of the Year awards. IFOY

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