...The speculative-grade ratings on Portland, Ore.-based NMHG Holding Co. reflect its vulnerable financial risk profile, fair liquidity, and fair business risk assessment with leading positions within cyclical and volatile markets. NMHG competes in the global forklift truck market, which is characterized as moderate in size, somewhat consolidated, and modestly capital intensive. Over the business cycle, the industry grows at GDP-like rates. Larger forklift manufacturers are also gaining market share from vendor consolidation, which is leading to national account opportunities. However, the industry is both cyclical and volatile; currently, demand is robust for lift trucks, following weakness in the 2000-2002 period. Although volumes are strong, margins have been under significant pressure because of higher raw material prices, which to date have not been passed on to the customer, given the lag between product orders and delivery. In 2004, raw materials dragged down pretax earnings by $48...
