Gehl First-Quarter Earnings Decline

Competitive pressures dragged down Gehl’s net income, which experienced a 75-percent drop in the first quarter of 2002 compared to the same period of 2001.

“Our results for the first quarter reflect continuing weakness and significant competitive pressures in our key markets, which have not improved from year-end 2001 levels,” stated William Gehl, chairman, president and CEO of the Gehl Company, West Bend, Wis.

Low rental rates and dealer consolidation contributed to weakened telescopic handler sales, while total company sales benefited from shipping both this product and compact excavators to Mustang and select rural equipment dealers, a May 3 press release noted. The new attachment business buffered financials for the first quarter, as did skid-steer loader sales, which increased.

In the meantime, the company is progressing with a previously announced plant rationalization project to improve efficiencies. It closed the Lebanon, Pa., at the end of March, outsourcing production for certain products and shifting Mustang skid steer production to the company’s Madison, S.D., plant. “These changes to our operations will help control costs and better position the company to participate in the upturn – when it finally emerges and works its way through to our key market segments,” Gehl said.

However, the company does not expect product order rates to signal a significant recovery of demand in the near future, the release stated. Income statements reveal materials costs and sales were comparable to 2001 first-quarter results, further illustrating pressure on the company to adjust price structure to compete in its market segments. The 2002 report indicated that higher-than-expected discounts and sales incentives the company offered to maintain projected sales levels in light of its competitive market will probably continue to negatively impact margins.

The author is Managing Editor – Special Projects for Lawn & Landscape magazine and can be reached at khampshire@gie.net.