Terex Intros New Division

Terex Corporation (TEX - Analyst Report) has launched a new division called Terex Port Solutions to be incorporated within its Terex Material Handling and Port Solutions segment. Under this new division, Terex will unite its port solution products with the products of Gottwald Port Technology which will be marketed as Terex Gottwald.

Based in Dusseldorf, Germany, Gottwald Port Technology is a subsidiary of Demag Cranes AG. In 2011, Terex acquired approximately 82% stake in Demag Cranes and formed the Material Handling and Port Solutions segment.

The product lines of Terex Port Solutions will include Noell, Fantuzzi, PPM and Reggiane brands, which will be merged with Gottwald’s wide product range. The new division will offer hip-to-shore and mobile harbor cranes, straddle and sprinter carriers, automated guided vehicles and stacking cranes, rubber tired and rail mounted gantry cranes among others.

The synergy benefits Terex in augmenting its portfolio in the lines of port solutions. In addition, it will enable Terex to offer innovative product range to meet the growing demand of its increasing customer base.

During the first-quarter 2012, Material Handling and Port Solutions Segment delivered revenues of $367.5 million, riding on strong demand for industrial cranes, primarily process cranes and handling technology and mobile harbor cranes.

Backlog in the segment was $492 million, a roughly 5% sequential increase. Demand for mobile harbor cranes soared, driven by strong port capacity and container traffic.

Recently, Terex successfully manufactured and delivered indigenous rough terrain cranes in Brazil. The company intends to expand in the lines of crane product support along with aftermarket coverage catering to the needs of a wide customer base.

However, Terex was not the only company to introduce rough terrain cranes in Brazil. One of its competitors, Manitowoc Company, Inc. (MTW - Analyst Report) has also opened a facility in Brazil to supply rough terrain cranes in Latin America.

Terex also faces tough competition from companies like Caterpillar Inc. (CAT - Analyst Report) and Deere & Company (DE - Analyst Report). Therefore, it must make an earnest effort to expand its product portfolio, serving its customers better to offset the growing threats from its competitors that can take away its potential buyers.

Terex currently retains a short-term Zacks #3 Rank (Hold). We have a long-term Neutral recommendation on the stock.