UBS Russia Investor Trip November 20, Joseph Krider President, Russia / CIS Terex Corporation

Transcription

1 UBS Russia Investor Trip November 20, 2008 Joseph Krider President, Russia / CIS Terex Corporation

2 Forward Looking Statements & Non-GAAP Measures The following presentation contains forward-looking information based on the current expectations of Terex Corporation. Because forward-looking statements involve risks and uncertainties, actual results could differ materially. Such risks and uncertainties, many of which are beyond the control of Terex, include among others: our business is highly cyclical and weak general economic conditions may affect the sales of its products and its financial results; our business is sensitive to fluctuations in interest rates and government spending; the ability to successfully integrate acquired businesses; the retention of key management personnel; our businesses are very competitive and may be affected by pricing, product initiatives and other actions taken by competitors; the effects of changes in laws and regulations; our business is international in nature and is subject to changes in exchange rates between currencies, as well as international politics; our continued access to capital and ability to obtain parts and components from suppliers on a timely basis at competitive prices; the financial condition of suppliers and customers, and their continued access to capital; our ability to timely manufacture and deliver products to customers; possible work stoppages and other labor matters; our debt outstanding and the need to comply with restrictive covenants contained in our debt agreements; our ability to maintain adequate disclosure controls and procedures, maintain adequate internal controls over financial reporting and file its periodic reports with the SEC on a timely basis; the previously announced investigations by the SEC and the Department of Justice; compliance with applicable environmental laws and regulations; product liability claims and other liabilities arising out of our business; and other factors, risks, uncertainties more specifically set forth in our public filings with the SEC. Actual events or the actual future results of Terex may differ materially from any forward looking statement due to those and other risks, uncertainties and significant factors. The forward-looking statements speak only as of the date of this presentation. Terex expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement included in this presentation to reflect any changes in expectations with regard thereto or any changes in events, conditions, or circumstances on which any such statement is based. Non-GAAP Measures: Terex from time to time refers to various non-gaap (generally accepted accounting principles) financial measures in this presentation. Terex believes that this information is useful to understanding its operating results and the ongoing performance of its underlying businesses without the impact of special items. See the Investors section of our website for a complete reconciliation. 2

3 Who is Terex Diversified Portfolio of Equipment Businesses Positioned for Continuing Long - Term Trends Leader In Our Categories and Our Industry Leveraging the Power Of One Company AERIAL WORK PLATFORMS CRANES MATERIALS PROC. AND MINING CONSTRUCTION ROADBUILDING AND UTILITIES 3

4 Where We Are Today Leader in Our Categories and Our Industry $31.6 Terex is one of the Largest Manufacturers of Construction Equipment in the World Based on last twelve months of available Construction Equipment Sales ($ s in Billions) $19.9 $10.4 $9.2 $8.7 $8.1 $5.3 $5.1 $4.8 $4.5 $4.4 $4.1 Caterpillar (1) Komatsu (2) Terex Hitachi (3) Volvo (4) Liebherr (7) Sandvik (10) CNH Global (8) Deere (5) JCB (7) Doosan (6) Oshkosh (9) (1) Represents Machinery sales for the last twelve months ended Sep 30, 2008; excludes Engine and Financial Product sales. (2) Represents Komatsu s Construction, Mining & Utility Equipment segment as of Sep 30, 2008 converted at an exchange rate of JPY/USD of (3) Exchange rate used as of Sep 30, 2008 of USD/JPY (4) Represents Volvo s Construction Equipment segment as of Sep 30, 2008 converted at an exchange rate of USD/SEK (5) Represents Deere s Construction and Forestry segment as of July 31, 2008 (6) Represents 2007 Construction Equipment sales of $1.5 billion converted at an exchange rate at Dec 31, 2007 of KRW/USD plus estimated 2007 bobcat sales of $2.9 billion (7) Estimated, as these are privately owned companies: JCB: 2007 sales of GBP 2.25 billion converted at Dec 31, 2007 GBP/USD rate of Liebherr: 2007 Cranes/Mining/Construction sales of EUR 5.5 billion converted at Dec 31, 2007 EUR/USD rate of (8) Represents CNH Global s Construction Equipment Segment as of Sep 30, 2008 (9) Represents Access & Commercial (both concrete & refuse trucks) for the 12 months ended Sep 30, (10) Represents Mining & Construction sales through Sep 30, 2008 converted at an exchange rate of SEK/USD

5 Diversified Portfolio of Product Leaders Leader in Our Categories and Our Industry Approximately 75% of 2007 sales were generated in markets where Terex has significant market presence AERIAL WORK PLATFORMS Articulated boom lifts (top 2) Telescopic boom lifts (top 2) Scissor lifts (top 3) NA Telehandlers (#2) CRANES All Terrain Cranes (top 2) Rough Terrain Cranes (top 3) Tower Cranes (#3) Large Crawlers (#1) Port Cranes (top 2)* MP&M Hydraulic Excavators (top 3) Mining Trucks (#3) Surface Drills (# 3) Crushing & Screening (#1)** Highwall Miners (#1) CONSTRUCTION Compact Track Loaders (#1) Material Handlers (#2 or 3) ROADBUILDING AND UTILITIES Front Discharge Mixers (#1) Insulated Aerials (#2) * Including pro forma impact of Fantuzzi acquisition; ** Mobile Equipment 5

6 Segment and Geographic Diversification Diversified Portfolio of Equipment Businesses 2007 Sales by Segment 2007 Sales by Geography RBU 7% Construction 21% AWP 25% Developing Markets 22% Japan / ANZ 7% W. Europe 37% MP&M 23% Cranes 24% USA / Canada 34% $ 9.1 Billion $ 9.1 B Balanced by business; Balanced geographically 6

7 Developing Markets Summary ~$2.3 billion* of sales were from developing countries, growing at more than 3x the overall growth rate for Terex Near-term uncertainty caused by the global credit crisis tempered by long-term need and priority for continued infrastructure investment 4,000 team members operating from more than 30 company and joint venture facilities in developing markets Goal of $4 billion sales at the end of Current environment makes this goal more challenging - Still guiding our thinking as to how we deploy * Last 12 months sales as through Q

8 Terex: Developing Markets Growth DEVELOPING MARKET SALES GROWTH ($) Africa Middle East DEVELOPING MARKET SALES BY BUSINESS ($) RBU AWP Construction Latin America MP&M Russia/ E. Europe Asia, ex. Japan Cranes % of 2007 sales * 42% CAGR Broad Based Global Growth Strongest In 3 Businesses * Developing market sales represented approximately 24% of sales YTD through Q and 26% of Q sales 8

9 Developing Markets - Goal Developed Markets Developing Markets 2007 Sales 2010 Sales Goal CAGR ~$ 2B $ 4B 26% 9

10 Most current outlooks for major developing markets (10/ 2008) Current Outlook for Growth Outlook for Real GDP Growth: Developing World (Nov. 2008) '04 '05 '06 '07 '08 '09 '10 '11 '12 China India Russia/ CIS SA/ Mexico ME/ N. Africa Southern Africa Outlooks Outlooks shifting shifting downwards, downwards, but but rates rates of of anticipated anticipated growth growth are are high high Full Full impact impact of of the the financial financial crisis crisis remains remains unclear unclear but but most most believe believe that that growth growth will will be be sustained sustained Pressure Pressure on on exports exports will will hurt hurt all all developing developing markets markets some some worse worse than than others others Exports Exports slowed slowed by by softer softer trade trade Commodities Commodities weaker weaker International International investment investment spending spending down, down, but but offset offset in in part part by by increased increased government government spending spending Governments Governments appear appear committed committed to to infrastructure infrastructure investments investments as as key key to to near near and and long long term term growth growth Implies Implies continuing continuing equipment equipment demand demand despite despite softer softer economic economic conditions conditions Source: Analysis of data from the Economist Economic Intelligence Unit (EIU) 10

11 Near Term Realities Developing Markets: Downside Risks Tightening of global credit delays projects and stalls procurement of capital goods Reforms to global financial markets put unintended constraints on continued growth in developing economies Developing Markets: Upside Potential Governments continue to provide monetary stimulus to develop infrastructure and create jobs, providing significant employment and opportunities for our products The global economy confronts another major shock (terror attack, military conflict, etc.) 11

12 Long Term Prospects Developing Markets: Downside Risks Near term situation creates instability that causes some economies to underperform their potential Developing Markets: Upside Potential Stability returns to global financial markets Recent/continuing investments in infrastructure drive continued expansion Local consumption becomes the driver for developing market growth Upward spiral of wealth creation is restored 12

13 Strategy for Developing Markets Accelerate Accelerate progress progress we we are are already already making making Remove roadblocks, accelerate investments, etc. to enable faster growth where traction has already been achieved Broaden Broaden benefits benefits from from the the progress progress we we make make Establish Establish traction traction in in high high potential potential but but under-penetrated under-penetrated geographies geographies Pursue Pursue white white space space opportunities opportunities that that might might have have been been missed missed Leverage synergies between businesses to achieve greater overall benefit from market progress that is made Facilitate entry by Terex businesses into high growth developing markets where we are currently under-represented Identify and pursue opportunities in developing markets that offer growth potential but sit outside the domain of current Terex businesses 13

14 Russia Remains Committed to Infrastructure Projects November 6, 2008 Reuters Story on infrastructure: Tender awarded for ~$1.3 billion railroad in the far eastern republic of Yakutia The 400-kilometre state-funded line will allow access to natural resources such as coal, diamonds & natural gas Russia has a $1 trillion plan to develop its infrastructure over the next 10 years. Railroad project is among the first to go forward since the onset of the global financial crisis. Tender was awarded in October to build the first stage of a motorway from Moscow to St. Petersburg. These projects are signaling that Russia is still committed to renewing its infrastructure despite the financial turmoil. [bold font added by Terex] Troika Dialog, Russia s Investment Story, Sept

15 China Infrastructure Investment November 9, 2008 Bloomberg China Stimulus Package China's State Council announced a $586 billion economic stimulus package To be used by the end of 2010 The Central Bank will pursue a ``moderately loose'' monetary policy Size of stimulus package is equivalent to almost a fifth of the country's 2007 GDP The extra spending may boost the nation's economic growth by 2% next year, said Xing Zigiang, an economist at China International Capital Corp. in Beijing 15

16 Panama Canal Project Moving Forward The Panama Canal Authority announced approval for a $2.3 billion financing package on October 14, 2008 for the Canal Expansion Program. Canal generated cash flow will finance the remainder of the $5.25 billion project. Two Terex hydraulic excavators working at the Panama Canal expansion project 16

17 Terex Russia 17

18 Russian Market Snapshot Russian Market Rigid Trucks 1122 Market Concentration Index Cold Planers 348 MHs Mob. Cranes Compactors Artics 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80 Source: MS Consulting Motor Graders Crawler Cranes Pavers Wheeled Excavators CAGR Crawler Excavators BHLs Wheel Loaders 135 Mob. Crushers 10,000 Excavators 7,500 Wheeled Loaders 6,000 Backhoes 5,000 Mobile Cranes 18

19 Growth Opportunity in Russia Construction: Major infrastructure projects including high profile works such as Sochi 2014, Vladivostok Convention Center, Federation Island MPM: Key customers in Severstal, Alrosa, Norilsk Nickel. High growth potential in quarries as Russia adopts mobile crushing systems. Roadbuilding: Asphalt imperative. St Pete Ring Road, Chita-Khabarovsk, Route 2 (London N.Novgorod), Route 9 (Helsinki Kiev), TransSib Corridor (Minsk Vladivostok) Cranes: Good results for tower cranes in Central and NW. As development and investment migrates to the regions demand for all-terrain and rough-terrain cranes increases. AWP: Nascent market but European rental companies are pioneering the concept. Anticipate govt safety regulations by 2010 to drive uptake. 19

20 Terex Russia Highlights Rep Office established 2005 with a staff of 2 sales representatives. Dec 2008 HC = 30 team members in Moscow and St. Petersburg CAGR = 68% Began import/sales activities via OOO Terex Rus in 2008 to get closer to the customer and offer onshore, RUR-denominated transactions Russia TEREX Revenue Mix Ongoing rationalization of distribution channels with significant net increase in dealer coverage in 2008 MPM 41% RBU 1% Construction 39% AWP 2% Cranes 17% 20

21 Developing Markets Summary ~$2.3 billion* of sales were from developing countries, growing at more than 3x the overall growth rate for Terex Near-term uncertainty caused by the global credit crisis tempered by long-term need and priority for continued infrastructure investment 4,000 team members operating from more than 30 company and joint venture facilities in developing markets Goal of $4 billion sales at the end of Current economic environment makes this goal more challenging - Still guiding our thinking as to how we deploy * Last 12 months sales as through Q

22 Questions? 22