Manitowoc has completed the separation of Manitowoc Cranes and Manitowoc Foodservice into two independent public companies, following the approval of shareholders in February of a motion first put forward by activist investors in early 2015.
The spin-off was achieved through a tax-free distribution to Manitowoc shareholders of one share of Manitowoc Foodservice stock for every share of Manitowoc company stock held previously.
The move follows the release of poor Q3 results by Manitowoc that showed slipping sales compared with Q3 2014 in part blamed on the performance of the company’s Manitwoc, Grove and Potain cranes in the Middle East.
Manitowoc Company sales were forecast to be $864m for Q3 2015 versus $986m the year before, while net earnings were projected at approximately $5m in Q3 2015 versus $73.1m previously.
Q3 2015 net sales in cranes were down by 23%m, lowering to $438.2m compared with $569.2m in Q3 2014. This resulted in an operating margin of 1.0% in Q3 2015 compared with 7.3% in Q3 2014.
Board member Kenneth Krueger was appointed interim chairman, president and CEO, noted: “Our shortfall during Q3 was largely the result of weakness in tower crane demand in Asia and the Middle East, coupled with broad-based softness in all-terrain cranes.
“In addition, we experienced significant delays in [variable-position] crawler crane shipments due to extended reliability testing and operational issues.”
However, it is expected that the split of the company into two will allow for the delivery of targeted streamlining and business strategies for both divisions in order to bring them back to profitability.
Manitowoc Cranes now accounts for the entire remaining business of the Manitowoc Company, which will now be led by Barry Pennybacker as president and CEO after his appointment in January.
Krueger, who remains as chairman, commented: “We are extremely pleased to complete the spin-off of Manitowoc Foodservice. Under the leadership of Barry Pennypacker, Manitowoc Cranes is well positioned to generate sustainable growth and value creation for their respective shareholders.”
Manitowoc also has plans for aggressive actions to offset the decline in demand, including right-sizing the business, plant rationalisations, headcount reductions, and other cost optimisation.
Krueger notes: “As we look to 2016, we will focus on those aspects of the business we can control, without sacrificing the innovation and quality for which Manitowoc is known.
“These actions will likely result in savings of between $135m and $145m over the next three years.”
