...The speculative-grade ratings reflect NMHG Holding Co.'s aggressive financial risk profile, fair liquidity, and weak business risk profile 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 moderately capital intensive. Over the business cycle, the industry grows at GDP-like rates. Larger forklift manufacturers such as NMHG are gaining market share from vendor consolidation, which offers them national account opportunities. However, the industry is both cyclical and volatile; currently, demand is solid for lift trucks, following weakness in the 2000-2002 period, although we expect growth rates to decelerate in the near term. Although volumes are robust, NMHG's margins have been under significant pressure because of higher raw material prices and production inefficiencies caused by the company's changeover in most product lines. However, we believe...
