TEX112008

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TEX112008

  1. 1. UBS Russia Investor Trip November 20, 2008 Joseph Krider President, Russia / CIS Terex Corporation
  2. 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 www.terex.com for a complete reconciliation. 2
  3. 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 MATERIALS PROC. CRANES PLATFORMS AND MINING ROADBUILDING AND CONSTRUCTION UTILITIES 3
  4. 4. Where We Are Today Leader in Our Categories and Our Industry Terex is one of the Largest Manufacturers of Construction Equipment in the World $31.6 Based on last twelve months of available Construction Equipment Sales ($’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) Hitachi (3) Volvo Liebherr (7) Sandvik (10) CNH Global (8) Deere (5) JCB (7) Doosan (6) (4) Komatsu (2) Terex Oshkosh (9) (7) Estimated, as these are privately owned companies: (1) Represents Machinery sales for the last twelve months ended Sep 30, 2008; excludes JCB: 2007 sales of GBP 2.25 billion converted at Dec 31, 2007 GBP/USD rate of Engine and Financial Product sales. 1.9870 (2) Represents Komatsu’s Construction, Mining & Utility Equipment segment as of Sep 30, Liebherr: 2007 Cranes/Mining/Construction sales of EUR 5.5 billion converted at Dec 2008 converted at an exchange rate of JPY/USD of 106.35 31, 2007 EUR/USD rate of 1.4598 (3) Exchange rate used as of Sep 30, 2008 of USD/JPY 106.35 (8) Represents CNH Global’s Construction Equipment Segment as of Sep 30, 2008 (4) Represents Volvo’s Construction Equipment segment as of Sep 30, 2008 converted at (9) Represents Access & Commercial (both concrete & refuse trucks) for the 12 months an exchange rate of USD/SEK 6.9252 ended Sep 30, 2008. (5) Represents Deere’s Construction and Forestry segment as of July 31, 2008 (10) Represents Mining & Construction sales through Sep 30, 2008 converted at an (6) Represents 2007 Construction Equipment sales of $1.5 billion converted at an exchange exchange rate of SEK/USD 6.9252 rate at Dec 31, 2007 of KRW/USD 936.07 plus estimated 2007 bobcat sales of $2.9 billion 4
  5. 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 MP&M CRANES PLATFORMS • Hydraulic Excavators (top 3) • All Terrain Cranes (top 2) • Articulated boom lifts (top 2) • Mining Trucks (#3) • Rough Terrain Cranes (top 3) • Telescopic boom lifts (top 2) • Surface Drills (# 3) • Tower Cranes (#3) • Scissor lifts (top 3) • Crushing & Screening (#1)** • Large Crawlers (#1) • NA Telehandlers (#2) • Highwall Miners (#1) • Port Cranes (top 2)* ROADBUILDING AND CONSTRUCTION UTILITIES • Compact Track Loaders (#1) • Front Discharge Mixers (#1) • Material Handlers (#2 or 3) • Insulated Aerials (#2) * Including pro forma impact of Fantuzzi acquisition; ** Mobile Equipment 5
  6. 6. Segment and Geographic Diversification Diversified Portfolio of Equipment Businesses 2007 Sales by Geography 2007 Sales by Segment RBU 7% Developing AWP Markets 25% W. Europe 22% Construction 37% Japan / ANZ 21% 7% USA / Cranes MP&M Canada 24% 23% 34% $ 9.1 Billion $ 9.1 B $ 9.1 Billion $ 9.1 B Balanced by business; Balanced geographically 6
  7. 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 $4 billion sales at the end of 2010 - Current environment makes this goal more challenging - Still guiding our thinking as to how we deploy * Last 12 months sales as through Q3 2008 7
  8. 8. Terex: Developing Markets Growth DEVELOPING MARKET DEVELOPING MARKET SALES BY BUSINESS ($) SALES GROWTH ($) RBU AWP Africa Construction Middle East Latin America MP&M Russia/ E. Europe Cranes Asia, ex. Japan 2004 2005 2006 2007 2004 2005 2006 2007 Broad Based Global Growth 22% of 2007 sales * Strongest In 3 Businesses 42% CAGR 2004 - 2007 * Developing market sales represented approximately 24% of sales YTD through Q3 2008 and 26% of Q3 2008 sales 8
  9. 9. Developing Markets - Goal Developed Markets Developing Markets 2007 Sales 2010 Sales Goal CAGR ~$ 2B $ 4B 26% 9
  10. 10. Most current outlooks for major developing markets (10/ 2008) Current Outlook for Growth Outlook for Real GDP Growth: 15 •• Pressure on exports will hurt all Developing World (Nov. 2008) Pressure on exports will hurt all developing markets ––some worse developing markets some worse 12 than others than others –– Exports slowed by softer trade 9 Exports slowed by softer trade –– Commodities weaker Commodities weaker 6 •• International investment spending International investment spending 3 down, but offset in part by down, but offset in part by increased government spending 0 increased government spending '04 '05 '06 '07 '08 '09 '10 '11 '12 •• Governments appear committed to Governments appear committed to China India Russia/ CIS infrastructure investments as key to SA/ Mexico ME/ N. Africa Southern Africa infrastructure investments as key to near and long term growth near and long term growth •• Implies continuing equipment Implies continuing equipment •• Outlooks shifting downwards, but Outlooks shifting downwards, but demand despite softer economic demand despite softer economic rates of anticipated growth are high rates of anticipated growth are high conditions conditions •• Full impact of the financial crisis Full impact of the financial crisis remains unclear but most believe remains unclear but most believe that growth will be sustained that growth will be sustained Source: Analysis of data from the Economist Economic Intelligence Unit (EIU) 10
  11. 11. Near Term Realities Developing Markets: Downside Risks Developing Markets: Upside Potential • Governments continue to provide • Tightening of global credit delays monetary stimulus to develop projects and stalls procurement of infrastructure and create jobs, capital goods providing significant employment and opportunities for our products • “Reforms” to global financial markets put unintended constraints on continued growth in developing economies • The global economy confronts another major shock (terror attack, military conflict, etc.) 11
  12. 12. Long Term Prospects Developing Markets: Downside Risks Developing Markets: Upside Potential • Near term situation creates • Stability returns to global financial instability that causes some markets economies to underperform their potential • 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. 13. Strategy for Developing Markets Accelerate • Remove roadblocks, accelerate Accelerate progress we are investments, etc. to enable faster growth progress we are already making already making where traction has already been achieved Broaden benefits • Leverage synergies between businesses Broaden benefits from the progress to achieve greater overall benefit from from the progress we make we make market progress that is made Establish traction in Establish traction in • Facilitate entry by Terex businesses into high potential but high potential but high growth developing markets where we under-penetrated under-penetrated geographies are currently under-represented geographies Pursue “white • Identify and pursue opportunities in Pursue “white space” opportunities space” opportunities developing markets that offer growth that might have been that might have been potential but sit outside the domain of missed missed current Terex businesses 13
  14. 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. 2008 14
  15. 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. 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. 17. Terex Russia 17
  18. 18. Russian Market Snapshot Russian Market 2007 Rigid Trucks 1122 280 Market Concentration Index Crawler Cranes 88 230 3206 283 175 Cold Wheeled Artics Planers Excavators Motor 1286 Graders 180 Mob. Cranes Crawler 382 Excavators 6222 345 348 MHs Pavers BHLs 130 1885 135 5011 Wheel Compactors Loaders Mob. Crushers 7410 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80 CAGR 2003-2007 Source: MS Consulting •10,000 Excavators •7,500 Wheeled Loaders •6,000 Backhoes •5,000 Mobile Cranes 18
  19. 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. 20. Terex Russia Highlights Rep Office established 2005 with a • staff of 2 sales representatives. Dec CAGR = 68% 2008 HC = 30 team members in Moscow and St. Petersburg Began import/sales activities via • OOO Terex Rus in 2008 to get closer to the customer and offer on- shore, RUR-denominated Russia 2007 - TEREX Revenue Mix transactions RBU 1% Construction Ongoing rationalization of distribution MPM • 39% 41% channels with significant net increase in dealer coverage in 2008 AWP Cranes 2% 17% 20
  21. 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 2010 - Current economic environment makes this goal more challenging - Still guiding our thinking as to how we deploy * Last 12 months sales as through Q3 2008 21
  22. 22. Questions? 22

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