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Wacker Neuson Group continues on growth path

Leading international light and compact equipment manufacturer the Wacker Neuson Group has again reported record revenue and earnings for the first half of 2015 despite challenging regional market conditions. The Group remains committed to its forecast for 2015.

Record six months in 2015
Revenue for the first half of 2015 increased 14 percent relative to the prior-year period to EUR 706.4 million (+8 percent when adjusted to discount currency effects) and thus reached a new record high for the period (H1/14: EUR 620.0 million). “Our business grew significantly despite negative market developments in many countries, especially outside of the US and Europe. This is due to our strong market position and our continued commitment to implementing our strategy,” explains Cem Peksaglam, CEO of Wacker Neuson SE.

In Europe, revenue rose 11 percent compared with the previous year. The region accounts for the lion’s share of revenue at 72 percent. The largest nominal increase came from the Americas region, which reported a 22-percent rise in revenue. This figure was significantly affected by currency effects, however (+3 percent when adjusted to discount these). Currency effects also impacted the Asia-Pacific region, where revenue for the first half of 2015 was 21 percent higher than the prior-year. When adjusted to discount currency effects, the rise in revenue was 8 percent in that region.

The compact equipment segment again proved to be the main growth driver in the first half of 2015. Revenue for this segment increased by 25 percent relative to the previous year (+22 percent when adjusted to discount currency effects). Revenue from the light equipment segment rose 5 percent and thus fell short of expectations. This was mainly attributable to difficult market dynamics in countries such as Canada, Brazil, Chile, China, Australia and Russia.  

Exchange rate effects had more of an impact on this segment as a large part of revenue from light equipment is generated outside of Europe. When adjusted to discount currency effects, revenue here was thus 6 percent lower than in the previous year. Revenue for the services segment, which covers the Group’s repair and spare parts business, increased 4 percent compared with the previous year. After discounting currency effects, revenue for the segment remained at the same level as the prior year.

Profit higher than H1 2014
Profit before interest and tax (EBIT) for the first half of 2015 rose 4 percent relative to the prior year to reach a new record high of EUR 65.7 million. The EBIT margin amounted to 9.3 percent (H1/14: EUR 63.4 million; 10.2 percent). Profit for the period came to EUR 45.2 million (H1/14: EUR 42.5 million). This corresponds to earnings per share of EUR 0.64, which is an increase of 6 percent relative to the previous year (H1/14: EUR 0.61).

Profit was affected by changes in the regional and sales mix relative to the previous year. The compact equipment segment’s share of Group revenue exceeded 51 percent while the light equipment’s share fell to just under 30 percent. The services segment accounted for 19 percent of revenue.

The Group intensified its production, R&D and sales activities in response to the strong rise in revenue. “We are strengthening our foundation for future success by making carefully managed investments in our international organization,” summarizes Peksaglam.

Revenue for second quarter of 2015 rises while profit falls below the prior-year quarter
Group revenue for the second quarter of 2015 amounted to EUR 382.1 million and is thus 16 percent higher than the record figure from the previous year (Q2 2014: EUR 328.4 million). When adjusted to discount currency effects, revenue for the quarter increased by 11 percent.
Profit before interest and tax (EBIT) for the second quarter of 2015 amounted to EUR 34.0 million and was thus 18 percent below the prior-year quarter, which was an unusually strong period for the Group (Q2 2014: EUR 41.3 million).

The EBIT margin amounted to 8.9 percent while the EBITDA margin was posted at 13.3 percent (Q2/14: 12.6 percent and 17.3 percent).    

Positive free cash flow expected for the year as a whole
At EUR 11.5 million, cash flow from operating activities for the first half of the year was positive (H1/14: EUR 52.9 million). However, investment in inventories had a key impact here. Discounting investments in working capital, cash flow from operating activities amounted to EUR 87.4 million (H1/14: EUR 84.2 million). The 19-percent increase in working capital since the start of the year was attributable to rising demand and currency effects. The investments in inventories were made to secure the Group’s delivery capabilities and to support its international expansion; the H1 level marks a working capital high and is forecasted to fall until end of the year. Free cash flow came to EUR -43.2 million (H1/14: EUR 1.0 million). The Group expects free cash flow for the year as a whole to be positive.

Growth forecast for 2015 confirmed
The Group remains optimistic about the current year. “Our order books are full and we expect the promising conditions in established markets to have a positive impact on our business,” continues Peksaglam. The Group expects revenue for the year to range between EUR 1.40 and 1.45 billion, which corresponds to a rise of between 9 and 13 percent relative to the previous year. The EBIT margin should still be on target between 9.5 and 10.5 percent (2014: 10.6 percent). “Our plans to launch truly new and innovative products to market together with continued stable business in the US, initial signs of improvement in various crisis-hit countries and our stronger services segment should all have a positive impact on Group performance in the second half of 2015,” concludes Peksaglam.

Revenue and Earnings
Key figures in € millionQ2/15Q2/14ChangeH1/15H1/14Change
Revenue382.1328.416.4%706.4620.013.9 %
Gross profit margin as a %29.130.7-1.6 PP29.430.1-0.7 PP
EBITDA50.856.8-10.6 %98.293.05.6 %
EBITDA margin as a %13.317.3-4.0 PP13.915.0-1.1 PP
EBIT34.041.3-17.7 %65.763.43.6%
EBIT margin as a %8.912.6-3.7 PP9.310.2-0.9 PP
EBT32.339.8-18.9 %62.560.43.5 %
Total profit/loss for the period23.928.2-15.2 %45.242.56.4 %
Earnings per share in €0.340.400.640.61