Hamilton Beach 2007 Annual Report Download - page 23

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as the National Fleet Network, was absorbed into the Hyster®
and Yale® wholesale and retail sales and services businesses in
an effort to mirror NMHG’s structure in North America.
Efforts are also under way to significantly reduce lift truck
inventories in Australia. The overall business improvement
program is intended to enhance the company’s sales, marketing,
major accounts and services capabilities significantly while
improving operational effectiveness and efficiency. Some
benefits of the program were realized in the latter half of 2007,
with the full impact expected to be realized in 2008 and beyond.
Outlook for 2008 and Beyond
The worldwide lift truck market
grew in 2007 and is expected to
continue growing in 2008. Markets
that are particularly strong and
expected to grow significantly include
Eastern Europe, China and other
developing countries. NMHG’s largest
market, the North American market,
declined in 2007, as expected, due to
the cyclical nature of the industry. The
North American market is forecasted
to decline further in 2008, along with other markets in
the Americas. Overall, NMHG Wholesale expects to have
moderately higher volumes in 2008 compared with 2007
levels as a result of strong European and Asian markets and
the introduction of newly designed products throughout
2008. However, if U.S. economic conditions deteriorate more
than expected, sales of units and higher-margin parts could
decline in 2008, which would adversely affect revenues and
profit margins.
The company is committed to addressing the critical
issue of unfavorable currency exchange rates, as evidenced by
the announcement of its new manufacturing restructuring
programs during 2007. Currency hedging positions continued
to mitigate unfavorable currency exchange rate fluctuations
in 2007, although not to the same level as in 2006. NMHG
Wholesale’s operating profit margin was 2.6 percent in 2007.
Assuming 2007 exchange rates for the euro and British pound
sterling had been at early 2002 levels, the year when NMHG’s
profit improvement goal was established, NMHG would have
been significantly closer to attaining its operating profit
margin target.
NMHG Wholesale’s financial objective is to achieve an
operating profit margin of 9 percent by 2011 to 2012. Several
key programs are intended to help NMHG reach that
goal, particularly focused Value Improvement Programs
for engineering and manufacturing, the comprehensive
manufacturing restructuring program, the implementation
of the SRM supply chain system and related component cost
reductions, and the introduction of new, innovative products
priced strategically and sold aggressively.
NMHG Retail’s objective continues to be to reach at least
break-even financial performance while building market
position. Improved results are
expected in 2008 and beyond,
particularly in Australia, where a
business improvement program was
implemented in 2007.
Overall, NMHG continues to
believe it will be increasingly well
positioned to offer superior products,
which are efficiently manufactured
and distributed by outstanding dealers.
Key profitability and growth programs,
particularly in the areas of quality and
efficiency, product flexibility and sales professionalism, are
expected to improve prospects for long-term growth in market
share and increased profitability.
In closing, I want to thank all NMHG employees, as well
as our dealers and suppliers worldwide, for their continued
hard work on behalf of the Hyster® and Yale® brands. And
I would like to thank NMHG’s customers, who remain the
primary motivation for that hard work. We continue to be
committed both to successful execution of our stated plans as
well as addressing the challenges and opportunities presented
by operating in a complex, global economy. I look forward to
working together successfully with all of NMHG’s partners
in 2008.
Continued emphasis on
engineering excellence
and on key programs
is expected to improve
prospects for increased
profitability at NMHG.
Michael P. Brogan
President and Chief Executive Officer
NACCO Materials Handling Group, Inc.