Off-highway vehicle OEM Wacker Neuson has delivered extremely positive financial results for the first half of 2018, with profits up and revenue at an all-time high of €825m (US$946m) – compared to €764m (US$876m) in the first half of 2017. Adjusted for currency effects, this corresponds to an increase of 12%.
Revenue growth was driven primarily by continued high levels of demand in the construction market and strong performance in the European agricultural sector. Bottlenecks among some suppliers prevented machines from being completed for customer orders and this had a dampening effect.
Furthermore, unfavorable currency developments, in particular the US dollar’s weakness against the euro, resulted in negative translation effects.
Growth across all regions
In Europe, the group’s largest sales market, revenue for the first half of 2018 rose 8% to €599m (US$687). This region’s share of group revenue remained unchanged at 73%.
“Our strong performance in this region was fueled by a buoyant construction market, positive development of our Kramer and Weidemann brands in the agricultural sector, and growth in our services segment, which includes our maintenance and spare parts business,” explained Martin Lehner, CEO of Wacker Neuson SE.
Revenue for the Americas region rose 9% to €202m (US$231m). The weak US dollar had a particularly strong impact in this region: when adjusted for currency effects, revenue rose 21%. A high level of investment activity among rental chains in North America and strong sales of compact equipment had a positive effect on business.
“Our skid steer loaders manufactured in the USA are key products in our compact equipment portfolio, helping us to win more market shares in the region with other products such as excavators and dumpers,” added Lehner.
Revenue in Asia-Pacific rose 4% to €24m (US$27.5m). The strong euro also squeezed growth figures here. Adjusted for currency effects, revenue rose 11%.
Significant rise in profitability
Profit before interest and tax (EBIT) grew by a substantial 28% to reach €78m (US$89m) in the first half year. This corresponds to an EBIT margin of 9.5%. The rise in revenue coupled with strict cost control measures and improvements to internal processes had a positive impact here. Increased material prices had a dampening effect, as did material bottlenecks among suppliers, which disrupted workflows at production facilities.
Productivity was also affected by ongoing restructuring initiatives across US production plants and the start of production at the new factory in Pinghu, China.
The group also secured some one-off earnings from the sale of a real estate. In June 2018, Wacker Neuson SE sold a real estate company with an industrial property in Munich-Milbertshofen, Germany.
The property was no longer required following the construction of a new R&D center for light equipment in Reichertshofen. The sale generated profit before tax of €54.8m (US$62.8m). This aligns with the expectations communicated by the group in February 2017.
Guidance for 2018 confirmed
“Due to the current healthy situation on international construction and agricultural markets, our most important target markets are intact and our order books are well filled,” continued Lehner.
The company has confirmed its guidance for fiscal 2018 and expects revenue to rise by 8-11%. The target corridor for the EBIT margin remains at 9-10%.
Uncertainties remain regarding the challenging situation with suppliers and future exchange rate developments, especially in relation to the US dollar.
