Morris Material Handling is finding life no easier under its new owners but has secured an extension to its credit facility.
The US crane and hoist manufacturer reported a net loss of $12.9m for the three months to 30 April, compared with a net profit of $1.5m for the same period in 1998.
The loss was attributed to a decline in demand – sales for the period fell from $80.8m to $71.8m – and higher than anticipated costs of reorganising the business in the wake of the sale of 80% of the company by Harnischfeger Industries to Chartwell Investments last year. Charges attributable to reorganisation, in what is the second quarter of the Morris financial year, amounted to $4.3m. A further $3.2m is expected to be spent on severance and reorganisation before the year-end, the company said.
Morris is also struggling with a hefty debt burden: $277m as of 31 January.
Cutbacks include 170 jobs axed from the 470-strong UK workforce based in Loughborough, the original home of Morris. Sales from the UK operation have virtually halved to $50m in the past year, due to the high value of sterling and the collapse in demand from South East Asia, traditionally a strong UK export market. Among the effects of the UK cuts was a very subdued launch for the new S3 range of electric chain hoists, which was virtually smuggled onto the market earlier this year as a replacement for the 360 range.
The problem for Morris is that cash is short at the very time when it needs a healthy war chest to keep up with the likes of KCI Konecranes, Columbus McKinnon and Mannesmann Dematic who have all been on the acquisition trail to bolster their global presence and grow their market share.
But new president and chief executive officer Jack Stinnett, who joined in March, remains positive about prospects and has managed to persuade Chartwell and other investors to put up another $10m under its credit facility to keep the wolves from the door and finance his expansionary business plans.
Said Stinnett: “This investment demonstrates the support Morris has from its shareholders and bankers. It gives Morris the financial flexibility to focus our attention on supporting our customers and continuing to grow our business through 2001 and beyond.
“This new financing took place because of the strength of our business plan and Morris’ position in the overhead crane market.” The UK plant has also been lifted by orders from British Aerospace, British Nuclear Fuels and BMW LandRover, taking crane orders to £14m ($22m) for the first half of 1999.
