*Editor's Note: This piece will be updated as more first quarter 2021 financial reports become available.
OEM and component manufacturers in the heavy equipment industry have reported their first quarter 2021 financial results. Recovering economies in many parts of the world have lead to increased equipment demand, and thus improved orders and sales for many manufacturers.
OEMs see increased equipment demand
Increased infrastructure and overall construction activity were beneficial to many heavy equipment manufacturers during the first quarter.
Caterpillar Inc. announced its first quarter (Q1) 2021 results on April 29. The company reports sales and revenues increased 12% compared to the same period in 2020. Per the company's press release announcing its Q1 results, the increase was due to higher sales volume driven by higher end-user demand and the impact from changes in dealer inventories which increased compared to 2020.
“I’m proud of our global team’s strong performance as they continue to serve our customers,” said Caterpillar Chairman and CEO Jim Umpleby in the company's press release. “We’re encouraged by improving conditions in our end markets and are proactively managing supply chain risks. Our dedicated team continues to execute our strategy for long-term profitable growth.”
The company says sales were higher across its three primary segments; increases were seen in Asia/Pacific, Latin America and EAME (Europe, Africa and the Middle East). However, it says sales in North America were flat. Caterpillar Inc.
Caterpillar reports its Construction Industries division achieved a 27% increase in sales compared to Q1 2020. This was driven by higher end-user demand and increased dealer inventories. Resource Industries saw a 6% increase in sales during the first quarter. The company says in its press release this was due to higher sales volume driven by the impacts of changes in dealer inventories, higher end-user demand for equipment and aftermarket parts and favorable currency impact from the Australian dollar, partially offset by unfavorable price realization. Demand from end users was higher in the mining market while the heavy construction, quarry and aggregates segments experienced lower end-user demand.
Husqvarna Group reports it had a strong start to 2021. Net sales during the first quarter increased 15%, and the company says it achieved organic sales growth of 24% due to solid performance in all divisions and main regions in which it operates.
Growth was especially strong for robotic lawn mowers in the consumer and professional segments, the company says in its press release announcing its Q1 2021 results. Battery-powered products, water solutions and professional products also saw strong sales during the quarter. Strong sales for these products lead to organic sales growth for the Husqvarna and Gardena Divisions of 21% and 37% respectively.
The company's Construction Division also achieved organic growth of 14% which Husqvarna says was due to improved market conditions during Q1.
Husqvarna says in its press release strong demand paired with global supply chain shortages have put pressure on the company's own supply chain and it is continuing to monitor and adjust accordingly.
“The first quarter of 2021 was characterized by high activity among our customers, which was reflected in good demand for both new products and services. Compared with the first quarter of 2020, our net sales increased by 3% to SEK 94.0 billion. The good sales volumes, not least in the service business, and our own measures to keep costs down contributed to the adjusted operating income improving to SEK 11.8 billion (7.1). The adjusted operating margin increased to a historically high 12.6% (7.8),” says Martin Lundstedt, President and CEO, in the company's press release announcing its first quarter results.
Highlights of the first quarter per Volvo Group's press release include: Volvo Construction Equipment
- In Q1 2021, net sales increased by 3% to SEK 94.0 billion (91.4). Adjusted for currency movements, net sales increased by 13%.
- Adjusted operating income amounted to SEK 11,821 M (7,140), corresponding to an adjusted operating margin of 12.6% (7.8).
- Reported operating income amounted to SEK 12,067 M (7,374).
- Currency movements had a negative impact on operating income of SEK 1,125 M.
- Earnings per share amounted to SEK 4.35 (2.30).
- Operating cash flow in the Industrial Operations amounted to SEK 5,665 M (-4,117).
- Volvo Group and Daimler Truck AG completed creation of fuel-cell joint venture cellcentric.
- On April 1, Volvo Group and Isuzu Motors completed the UD Trucks transaction as part of the strategic alliance.
- Shortage of semiconductors impacting production.
Its construction equipment business further emphasized the high level of equipment demand for the global company. Volvo Construction Equipment (Volvo CE) reports Q1 sales increased 23%. This was due in large part to infrastructure investments in China and other parts of the world, has well as increased activity in the construction sector.
Volvo CE says it achieved increased sales in all global markets and segments; it also increased deliveries 53% due to the high level of sales during the quarter.
- European sales started slowly but increased 87% due to stronger demand in the later half of the quarter.
- The Chinese market was up 142% in the first 2 months of the quarter.
- Asia (not including China) improved16% with the key markets being India, Korea and South East Asia.
- South America grew 41% due in part to increased demand for commodities.
- North America improved 7% with potential government infrastructure investments creating positive sentiments.
Volvo CE President Melker Jernberg says in the company's press release announcing its Q1 results, “It is heartening to see demand increasing in the first quarter of this year, with sales up across all regions and markets. We can take confidence that we have weathered a tough period for our customers, our employees and the wider industry and are beginning to now see higher activity. In many countries, we have seen increased investment in an aging infrastructure, something which we expect to continue for the future. Together with a high level of construction activity in several other sectors, this is driving demand for both new machines and services, reflected in both deliveries and order intake rising sharply for the first quarter.”
For the first quarter 2021, Daimler AG reports its total unit sales of cars and commercial vehicles increased 13% to 728,600 units. The company says in its press release announcing its Q1 results this was due to recovery of the global economy combined with an attractive vehicle portfolio.
Harald Wilhelm, Chief Financial Officer of Daimler AG, said in the company's press release, “Deliveries, revenues and profits increased significantly, particularly thanks to tailwinds in China, a strong product mix and favorable pricing, supported by industrial performance enhancements and cost control. After this promising start, we are very confident that we can keep up the pace to improve our margins on a sustainable basis and at the same time expand our electric vehicle lineup.”
Daimler's truck and bus division increased sales 4% to 101,300 total vehicles. Daimler Trucks increased sales 6% during the quarter while Daimler Buses saw a decrease of 27%.
Due to the company's strong performance in the first quarter, it has raised its guidance for the year and expects sales and revenues to be significantly higher than the previous year. For Daimler Trucks & Buses, it now anticipates adjusted return on sales of 6-7% in 2021.
AGCO reports net sales increased 23.4% during Q1 2021. Excluding favorable currency translation impacts, the company says net sales were up approximately 19.8% compared to the same period in 2020.
Regional sales highlights per the company's press release announcing its Q1 results include:
- Reported regional sales results : Europe/Middle East (EME) 19.2%, North America 10.7%, South America 56.3%, Asia/Pacific/Africa (“APA”) 83.1%
- Constant currency regional sales results : EME 11.5%, North America 9.7%, South America 83.8%, APA 65.9%
- Regional operating margin performance: EME 10.9%, North America 12.3%, South America 6.7%, APA 10.5%
- Increased quarterly dividend by 25% and declared variable special dividend of $4.00 per share
- Raised full-year outlook for net sales and net income per share
"Favorable market demand and positive market response to our technology-focused products helped produce sales growth and margin expansion across all regions. Outstanding execution from our team allowed us to minimize the impact of ongoing supply constraints, and an improved pricing environment helped offset material and freight cost inflation. Healthy farm fundamentals are driving robust replacement demand and our order boards remain well ahead of last year. With increased visibility for the coming quarters, we have raised our net sales and earnings forecast for 2021 while enabling continued investment in our premium technology, smart farming solutions and enhanced digital capabilities," said Eric Hansotia, AGCO’s Chairman, President and Chief Executive Officer, in the company's press release.
"North American industry retail sales increased in the first three months of 2021 compared to the same period in 2020," continued Hansotia. "Sales of low horsepower tractors moved above prior peak levels while demand for high horsepower tractors also improved. With the fleet age remaining extended, industry retail sales of North America large agricultural equipment grew approximately 12% in the first quarter. Industry retail sales in Western Europe also increased in the first quarter of 2021 with growth across nearly all major markets. With higher wheat, dairy and livestock prices projecting favorable farm economics, farmer sentiment is expected to remain strong in Western Europe, supporting increased equipment demand in 2021. In South America, industry sales increased during the first three months of 2021 driven by improved demand in both Brazil and Argentina as well as recovery in the smaller export markets. A healthy first crop as well as favorable exchange rates are supporting positive economic conditions for farmers who continue to replace an aged fleet. Our long-term global view remains positive. Increasing demand for commodities, driven by the growing world population, as well as rising emerging market protein consumption and biofuel use, are expected to support elevated farm income and healthy conditions in our industry."
Component manufacturers report improved Q1
Increased activity on the OEM side lead to improved sales for component manufacturers, as well during the quarter.
DEUTZ AG announced during its Annual General Meeting held April 29 the company is feeling optimistic about 2021. Its preliminary first quarter results "show a return to an upward trajectory...with new orders rising by a third," said Dr. Frank Hiller, Chairman of the Board of Management of DEUTZ AG, in a press release announcing results of its general meeting.
"We expect that our customers will remain keen to invest going forward," he added. DEUTZ AG
In its press release announcing preliminary Q1 2021 results, DEUTZ says new orders increased 30.3% compared to the same period in 2020. All of its main application segments recorded double-digit percentage increases, it says, and unit sales rose from 31,546 to 32,249 engines.
Because it started the year better than expected, DEUTZ has raised its full-year guidance for 2021. It anticipates unit sales of 140,000-155,000 engines (previously: at least 130,000) which will result in increased revenues between €1.5 billion and €1.6 billion (previously: at least €1.4 billion).
However, it also points out in its press release the ongoing pandemic and global semiconductor supply shortage are creating some uncertainties for the future. It says in its press release that difficulties with the supply of some components are expected to continue until at least the third quarter.
Steel manufacturer SSAB reports strong recovery for its first quarter of 2021. Per the company's press release announcing its Q1 results, steel demand is strong and prices are increasing which aided the company during the quarter. It says production levels have been stable which combined with better prices and higher shipments lead to a sales increase of SEK 1.4 billion compared to the fourth quarter of 2020.
SSAB also notes there was strong demand for high-strength steel and Special Steels. Shipments reached a record high of SEK 376 (305) thousand tonnes it states in its press release. The company reports increases in both its European and North American businesses although it notes shipments for the latter were impacted by weather-related issues as well as a low opening balance of slab inventories. The company says market conditions are favorable and it expects good activity to continue during the second quarter.
The Timken Company reports its Q1 2021 sales were up 11% from the same period a year ago, and up 15% compared to the fourth quarter of 2020. Per the company's press release announcing its Q1 results, the increase was driven by organic growth across most end-market sectors led by renewable energy and off-highway, as well as the benefit of currency translation and the Aurora Bearing acquisition.
Timken's Mobile Industries business saw increased sales of 8.1% compared to 1 year ago. The company says this was driven by organic growth in the off-highway, heavy truck and automotive industries. Favorable currency translated benefited sales results during the quarter, as well.
For 2021, the company is now expecting revenue to be up approximately 18%; previously it was forecasting 12% growth for the year. "We are raising our full-year outlook to reflect the robust and improving market conditions as well as our strong operational execution," said Richard G. Kyle, Timken President and Chief Executive Officer, in the company's press release. "Our outgrowth initiatives are contributing to our positive 2021 outlook, as we continue to win new business with our differentiated products and engineering innovation. We anticipate strong margin performance again this year, despite supply chain and other cost challenges. Overall, we are on track to deliver record results and we remain focused on executing our strategy to win in the marketplace and deliver higher performance for shareholders."
Dana Incorporated announces strong Q1 2021 financial results. The company says sales during the quarter were $2.26 billion, compared with $1.93 billion in the same period of 2020. This was due to strong customer demand and conversion of sales backlog.
Higher sales figures were the result of "continued strength in the light-truck market, as well as growth in both the commercial vehicle and off-highway markets," said James Kamsickas, Dana chairman and CEO, in the company's press release announcing its Q1 results. "While our end-markets have recovered from last year's shutdowns, higher costs related to supply-chain disruptions and shipping constraints continue to challenge the mobility industry. Our established multi-end-market presence tempers these outside pressures as we continue to execute our enterprise strategy, launch our significant new business backlog, and focus on strengthening our vehicle electrification position."
"As markets continue to recover from the challenges of the global pandemic, strong first-quarter sales provide the conviction to increase our full-year guidance as we accelerate the achievement of our long-term growth targets," said Jonathan Collins, Executive Vice President and Chief Financial Officer of Dana, in the company's press release. Dana Inc.
The company's revised 2021 financial targets include:
- Sales of $8.50 to $9.00 billion;
- Adjusted EBITDA of $920 million to $1.0 billion, an implied adjusted EBITDA margin of approximately 11% at the midpoint of the range;
- Diluted adjusted EPS of $2.10 to $2.60;
- Operating cash flow of approximately 7-8% of sales; and
- Adjusted free cash flow of approximately 3-3.5% of sales.
Parker Hannifin Corporation reports a successful fiscal 2021 third quarter, which ended March 31. Per the company's press release announcing it's financial results, sales were $3.75 billion, compared with $3.70 billion in the third quarter of fiscal 2020 and net income was an all-time quarterly record at $471.6 million, an increase of 28% compared with $367.3 million in the prior year quarter.
During the third quarter:
- Orders increased 6% for total Parker
- Orders increased 11% in the Diversified Industrial North America businesses
- Orders increased 14% in the Diversified Industrial International businesses
- Orders decreased 19% in the Aerospace Systems Segment on a rolling 12-month average basis
Due to the strong performance thus far, the company has increased its guidance for the full 2021 fiscal year which ends June 30, 2021. “Our increased guidance reflects strong year-to-date performance and a positive outlook for macroeconomic conditions as we enter the fourth quarter of this fiscal year," said Chairman and Chief Executive Officer Tom Williams in the company's press release.
The Goodyear Tire & Rubber Company announces during the first quarter of 2021 its segment operating income was higher than the first quarters of 2020 and 2019. "We delivered impressive segment operating income, which was significantly above first quarter 2020 results and also nearly 20% higher than first quarter 2019 despite sales volumes not yet having fully recovered to pre-COVID levels," said Richard J. Kramer, chairman, Chief Executive Officer and President, in the company's press release announcing its Q1 results. "We achieved these results despite the impact of a severe winter storm in the U.S. and industry supply chain challenges during the quarter."
Goodyear reports its Q1 2021 sales were up 15% compared to the previous year; the company says sales were driven by higher volume, improvements in price/mix and favorable foreign currency translation. Per its press release, original equipment unit volume increased 5%, driven by higher vehicle production in Asia Pacific and increased market share in EMEA.
By business segment, the company reports its America's business saw a 7% increase in Q1 sales with tire unit volume also increasing 7%. OEM unit volume decreased 6% due to lower industry demand but partially offset by consumer share gains in Latin America. Replacement tire volume in this region increased 11% during the quarter.
Europe, Middle East and Africa (EMEA) first quarter sales rose 24% from 2020; tire unit volume for this market increased 10%. There was increased volumes from the replacement segment (up 11%) and OEMs (up 6%).
Asia Pacific Q1 sales increased 27% with tire unit volume up 29%. Replacement volume rose 31% in this market while OEM unit volume was up 26% which the company says was driven by a recovery in vehicle production in China.
Allison Transmission has announced its first quarter 2021 sales increased 10% from the fourth quarter of 2020 and decreased 8% from Q1 2020. "Despite the severe disruptions to global supply chains that are currently impacting our end markets, customer demand is improving and the Allison team continues its tireless efforts to fulfill the Allison promise," said David S. Graziosi, President and Chief Executive Officer of Allison Transmission, in the company's press release announcing its Q1 2021 results.
"Thanks to improving customer demand and a resilient outlook, we are increasing our full year 2021 net sales guidance from a range of $2,265 to $2,415 million to $2,325 to $2,475 million. We also continue to fund significant investments in engineering – research and development and capital expenditures to further position Allison to capitalize on meaningful growth opportunities across all of our end markets," continued Graziosi.
Market segment results per the company's press release are as follows:
- North America On-Highway end market net sales were down 9% from the same period in 2020 due to the continued effects of the pandemic, and up 12% on a sequential basis principally driven by improving demand for last mile delivery, regional haul and vocational trucks.
- North America Off-Highway end market net sales were down $6 million from the same period in 2020 principally driven by lower demand for hydraulic fracturing applications and up $1 million sequentially.
- Defense end market net sales were up 13% from the same period in 2020 and up 2% on a sequential basis, in both cases principally driven by higher demand for Tracked vehicle applications.
- Outside North America On-Highway end market net sales were up 17% from the same period in 2020 and up 9% sequentially, in both cases principally driven by higher demand in Asia.
- Outside North America Off-Highway end market net sales were down $11 million from the same period in 2020 and up $5 million on a sequential basis, in both cases principally driven by fluctuations in demand in the energy sector.
For the full year 2021, the company expects higher demand in the global On-Highway, Service Parts, Support Equipment & Other, and North America Off-Highway end markets as economies continue to recover.
Bosch Group sales rose 17% on a year-over-year basis, the company reports. While the company is feeling confident about 2021, it also expects the year to be a challenging one again. As such, Bosch is forecasting sales to increase 6% in 2021. However, in its press release announcing Q1 2021 results Bosch says the effects of the semiconductor supply challenges remain an uncertainty.
The company predicts the global economy will grow just under 4% in 2021 as the global health pandemic is still presenting challenges in many parts of the world. Bosch
Despite these challenges, the company anticipates industry megatrends of electromobility, connectivity and others to be strong drivers for sales in 2021 and beyond. In its press release the company says sales revenue for electrical powertrain components has grown 40%. Bosch aims to continue increasing annual sales in this segment as electrification increases in various transportation industries.
The company also projects hydrogen fuel cells to be a key growth driver. Bosch says in its press release that it believes the market for green hydrogen in the EU will be worth almost 40 billion euros by 2030 – with annual growth rates of 65%. As such, it is continue to advance its technology developments in this area.