Terex Corp. (TEX) is a multinational manufacturer of a broad range of equipment, primarily for the construction, infrastructure and surface mining industries.

The company has been witnessing sharp decline in volumes across the board since the second half of 2008, primarily due to deterioration of the North American and European economies. It expects 2009 net sales to decline approximately 50% compared to 2008 due to weak global end-markets and constrained credit availability worldwide.

In response to uncertain market conditions, the company has taken various initiatives to reduce costs and inventories. Despite these efforts, Terex posted losses in the first three quarters of 2009.

The global economic slowdown is adversely impacting the company’s businesses, particularly the AWP and Construction businesses. Both segments have posted operating losses year-to-date. AWP customers in North America and Western Europe significantly slowed their purchases due to the softening of construction activity and uncertainty regarding the global economy.

The demand for construction equipment remained soft on the back of weak global commercial and residential markets. Demand for both compact and heavy construction equipment remains weak due to low activity levels and lack of financing availability for projects and capital equipment. Order intake is slow for all types of construction equipment.

Even the other segments are facing softer demand, cancellations and rescheduling of orders. With no substantial recovery expected in any of the company’s end-markets in the near-term, we believe it is impossible for the company to post profits in the next couple of quarters.

We are downgrading the rating on the stock to Underperform.

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