Oshkosh Corporation reported fiscal 2015 third quarter net income of $89.9 million, compared to $105.1 million in the third quarter of fiscal 2014. Contributing to the decline was slowing sales in its access equipment segment, JLG Industries Inc., which showed a drop of 10.3 percent to $932.6 million for the third quarter of fiscal 2015. A slowdown in the order rate in North America was the primary driver of lower shipments in the quarter along with, to a lesser extent, delays in new product launches. The strengthening U.S. dollar also negatively impacted access equipment segment sales by $33.4 million. On a constant currency basis, sales decreased 7.0 percent.
Access equipment segment operating income decreased 18.2 percent to $136.4 million, or 14.6 percent of sales, for the third quarter of fiscal 2015 compared to $166.8 million, or 16.0 percent of sales, in the third quarter of fiscal 2014. The decrease in operating income was primarily the result of lower sales volume, unfavorable currency impacts of $6.9 million and production inefficiencies related to challenges with several new product launches, offset in part by lower incentive compensation expense.
“Our access equipment segment sales fell short of our expectations for the third quarter, normally our seasonally best quarter, due to heavy rains in May disrupting construction projects across the Southern U.S., cautious order patterns arising from uncertain rental market conditions, including the impact of lower oil and gas prices on rental demand for access equipment, and to a much lesser extent, delays with several new product launches,” added Szews. “While these launch issues are largely behind us, they impacted our sales and manufacturing costs in the quarter.
“We believe the fundamental drivers for access equipment demand remain solid. Specifically, we believe slowly rising residential and non-residential construction in the U.S. will continue to drive rental fleet demand for access equipment, and that rental company metrics will remain strong. However, we now believe that a shortened construction season in the U.S. due to severe weather over the last two quarters along with the impact of lower oil and gas prices on rental fleet utilization are leading U.S. rental companies to reduce access equipment purchases compared to our earlier expectations for fiscal 2015. Further, we now expect an approximate 5% - 10% sales decline in our access equipment segment in fiscal 2016 as we do not expect improving construction demand to fully offset anticipated reduced replacement demand resulting from very low industry purchases during 2009 and 2010."