10.11.2016

Profit lift at Wacker Neuson

Equipment manufacturer Wacker Neuson has reported a slight rise in third quarter revenues, with higher profits.

Total revenue for the nine months to the end of September were however flat at just over a €1 billion, with compact equipment, which includes telehandlers, min loaders and excavators, rising three percent to €520 million, while sales of light equipment fell eight percent. Europe and Asia pacific posted small revenue gains, while the Americas slipped 15 percent. Pre-tax profits for the period were €65 million, 15 percent down on this time last year, thanks mostly to a tough first quarter.

Moving on to the third quarter, revenues were 1.5 percent higher at €315.7 million, thanks to a nine percent rise in Europe – mostly the German speaking countries, France and Belgium – partially offset by a 15 percent fall in the Americas and a 23 percent drop in Asia /Pacific – most of the fall coming in Australia and New Zealand. Compact equipment sales were 13 percent higher at €154 million while Light Equipment sales dropped 16 percent. Pre-tax profits soared 27 percent to €177 million, albeit from a low base last year.

Chief executive Cem Peksaglam said: “2016 is undoubtedly a year of transition for the group, during which we have optimised processes and structures and also laid the foundation for future growth. For example, we continued to expand our international footprint by establishing new production sites in Brazil and, in future, also China. We consolidated the different spare parts services at our compact equipment production facilities in Europe to create a central warehouse in Nuremberg and also merged our R&D centre for light equipment from Munich with our production site in Reichertshofen. In addition to this, we launched our eCommerce platform. And at this year’s bauma fair we again sent a strong signal to the industry with new models in our zero-emission product line. We are strengthening our organisational and execution capabilities so we can more effectively master growing global challenges over the coming years”.

“Levels of uncertainty and volatility remain high in our markets. Business in North and South America, which accounts for 21 percent of our group revenue, developed below our expectations as did markets in Australia and Africa. However, we expect Europe to remain a robust sales region overall.”
The company now expects revenues for the full year to come in at the lower end of its published forecast between €1.375 and €1.425 billion. Net debt at the end of September was seven percent lower than this time last year at €224.3 million but up 13 percent since the start of 2016.

Vertikal Comment

All in all this a good quarterly performance from Wacker Neuson, it quite clear that its Compact Equipment business is making all the running, probably as much due to geographic penetration of its Light Equipment than anything else. But it is building a solid reputation for its telehandlers and other machines and has plenty of room to expand sales of these products geographically as well as widening the range a little.

It looks as though the company should end the year marginally above last years record revenues, but slightly lower in terms of profitability. But given the challenges in the Americas it is a pretty reasonable result.
However further challenges loom on the horizon. in 2018 the company's OEM supply agreements with Claas for telehandlers and CAT for mini excavators will come to an end. Leaving the company just one year to replace the revenue with increased sales of its own equipment. To achieve that it needs to beef up its distribution and its brand marketing, which is currently limited.