Shares of Terex Corporation (TEX - Free Report) dropped around as much as 16% after the company lowered its 2013 earnings guidance. Terex slashed its full-year earnings (excluding items) guidance to $1.90 to $2.10 a share from $2.40 to $2.70 as its sales growth has been weaker than anticipated.
Terex also forecasts second quarter earnings per share in a range of 50 cents to 60 cents. The company anticipates improved results in the second half of 2013 based on the slow recovery in the North American market. The Aerial Work Platform segment continues to benefit from North American rental channel demand.
Markets for construction, Material Handling & Port Solutions (MHPS) and cranes are disappointing due to weakness in global mining and construction. Demand for Terex's other product lines, which include Aerial Work Platform and Materials Processing, has held up. It is not however strong enough to offset the weakness in other business lines.
While the company remains on track with cost reduction measures in its MHPS and cranes business along with divestiture of the poorly performing businesses in the construction segment, softness in the European market remains a concern.
Owing to weaker demand for mining equipment, industry leader Caterpillar Inc. (CAT - Free Report) also plans to lay off about 260 production employees at its South Milwaukee plant. Caterpillar recorded a 45% slump in first quarter 2013 earnings. Full-year sales and profit expectation were also lowered by Caterpillar due to the weakness in mining business.
Terex, which belongs to construction and machinery industry along with Astec Industries, Inc. (ASTE - Free Report) and H&E Equipment Services Inc. (HEES - Free Report) , reported tepid first-quarter 2013 results. Adjusted earnings declined 21% year over year to 23 cents per share. It fell short of the Zacks Consensus Estimate of 28 cents as well. Revenues in most of its segments dropped significantly.
Westport, CT-based Terex is a global equipment manufacturer catering to the construction, infrastructure and surface mining industries. The company’s manufacturing facilities are located in the U.S., Canada, Europe, Australia, Asia and South America. It also offers a complete line of financial products and services to assist in the acquisition of equipment through Terex Financial Services.
Terex currently retains a short-term Zacks Rank #3 (Hold).