06.08.2019

Mixed first half for Wacker Neuson

German telehandler and equipment manufacturer Wacker Neuson has reported strong sales growth but a slump in profits for the first half and second quarter.

Total revenues for the six months to the end of June were €950.7 million, up 15 percent on the same period last year. Over 70 percent of the company’s revenues come from Europe where sales surged 16 percent to €692.3 million, thanks in particular to strong performances in Germany, France, the UK, Poland, Italy and Austria. The Americas also saw strong growth with revenues rising 14 percent to €229.5 million, while sales in the Asia Pacific region increased 20 percent to €28.9 million. The Compact Equipment division, which includes telehandlers, was 21 percent higher at €537.9 million – or close to 57 percent of total sales. Pre-tax profit for the period however dropped 38 percent to €79.8 million, however, last years numbers included a one off sales of a real estate business for €54.8 million, take that out and pre-tax profit increased by 8.5 percent – still held back by high catch up costs with finishing off previously built equipment that was sitting waiting for components.

Moving on to the second quarter total revenues improved 14 percent to €516.1 million, with Europe up 13 percent to €375.6 million, Americas 14 percent higher at €125 million and Asia Pacific 18 percent to €15.5 million. Sales of Compact Equipment improved 18 percent to €292.1 million. Pre-tax profits plummeted 54 percent to €49.9 million, due to the reasons mentioned above, however even with the one off gain removed profits still declined - but by a more modest 7.5 percent.
Net debt jumped 158 percent to 484.3 million due to the poor cash flow, high inventory and debtors caused by the delayed shipments.

Chief executive Martin Lehner said: “The first half of the year showed us once again that our solutions meet the needs of our customers. We gained shares in numerous markets, driven largely by our many product innovations – which are key competitive differentiators for us. The raft of developments that we showcased at bauma in Munich last April illustrate that we are ideally positioned to continue along this growth path and achieve the medium-term goals set out in our Strategy 2022.”

“In 2018, the group’s growth was hampered by major bottlenecks in the global supply chain. The situation here has eased considerably. However, reducing the number of unfinished machines caused by these bottlenecks resulted in additional effort that temporarily slowed productivity at the manufacturing plants. Profit before interest and tax (EBIT) for the first half-year rose 7.4 percent to EUR 84.5 million (H1/18: EUR 78.7 million). At 8.9 percent, the EBIT margin was slightly lower than the prior-year level (H1/18: 9.5 percent). This result was further squeezed by increased production and logistics costs as well as ongoing restructuring measures at the US plant in Menomonee Falls. Nevertheless, the group expects the progress that it has already made in the US to have a tangible positive impact on profitability in the second half of 2019 relative to the previous year.”

Vertikal Comment

This is a very mixed set of numbers and clearly the company has handled the supply chain issues and component availability issues less well than some of its competitors. That said it looks as though it is now on top of the situation and likely to achieve another record sales year in 2019.

The fact is that the company has a first rate product line – in terms of quality and features, a solid reputation, some innovative new products and a broadening range, while stepping up its geographic coverage. All this leads one to think that the future is bright.

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