D. Marie Manitowoc Company Inc (NYSE:MTW) has provided an update of its 3Q16 results that shows the company continues to live through a difficult time. Cost-cutting measures at Manitowoc are set to continue as the company struggles with soft demand for its products amid slowdown in energy market as oil prices remain depressed.
Inside 3Q16 preliminary results
Manitowoc is expecting net sales in the band of $350 to $438 million for 3Q16. That compares with the consensus estimate calling for revenue of at least $346 million. Manitowoc’s revenue forecast seems to compare favorably with the consensus estimate. However, the bottom-line is expected to suffer severely, largely because of the charges related to restructuring.
Manitowoc sees GAAP loss from continuing operations of $138 million for 3Q16, significantly higher than $30 million loss in the like quarter last year. GAAP operating loss is seen coming at $134 million, indicating a sharp increase from $8 million loss in the comparable quarter in 2015.
The operating loss for the latest quarter consists of $77 million in impairments related to some software assets. The loss also stems from charges related to relocation of crawler and tower crane production work, which is part of the restructuring the company has been doing.
Backlog slips
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Not only is Manitowoc struggling with mounting losses because of restructuring measures, but its backlog has also dipped, thus casting doubt on its future revenue and profitability.
The company said orders and backlog declined by double-digits in 3Q16. The CEO, Barry Pennypacker, noted that pressure on the backlog has continued in 4Q16, which sounds as an advanced warning that current quarter could disappoint.
Cost-cutting measures
Amid the challenging market conditions, Manitowoc has attempted to pare losses by dropping some expenses. Payroll department is one of the areas that have been affected in Manitowoc’s efficiency drive as layoffs continue. Curtailing of production is another cost-cutting measure that Manitowoc has rolled out. Manitowoc’s production adjustments have largely affected build schedule of mobile cranes.
The slowdown of activities in the energy sector because of the lower oil prices is a major reason Manitowoc’s woes have multiplied.
