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Will Manitowoc Company Inc. Stock Recover in 2016? Image sources: Manitowoc
2015: A terrible year for Manitowoc
Manitowoc’s dismal operational performance is largely to blame Why the stock crashed
The worst in the industry
So why did Manitowoc’s sales and profits tumble in 2015?
The company faced many headwinds Plunging oil prices hurt demand for off-highway cranes from the oil & gas sector Persistent weakness in key international markets like Asia and the Middle East hurt crane sales Lower capital spending by restaurant chains hurt demand for foodservice equipment Start-up problems with Kitchencare range hurt foodservice margins Currency fluctuations: a stronger dollar = lower international revenues when converted. Hurt both cranes and foodservice segments
While Manitowoc’s foodservice business appears to be turning around, the outlook for cranes looks grim going forward What lies ahead
Challenges aplenty Declining manufacturing activity in China and devaluation of the yuan = lower demand for cranes Oil could fall further as supply > demand and OPEC is standing its ground Growth in key international markets like Brazil and China remains uncertain Dollar remains strong
Troubling signs Manitowoc’s crane orders and backlog slipped 40% and 12% year over year, respectively, in Q3. Operating margin fell to 1% from 7.3%. Outlook for 2015: 15%-20% drop in crane sales and flat foodservice revenue. Management expects 2016 to “be a challenging year.” Aggressive restructuring underway, indicating greater pain ahead.
Foolish takeaway: A risky bet Too many headwinds, no major growth catalyst in sight Stock is expensive at 36 times trailing P/E Company on track to split into two this running quarter. But deteriorating end markets could mean little shareholder value in a standalone cranes company
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