Wacker Neuson with a strong second quarter
In the second quarter of 2016, leading international light and compact equipment manufacturer the Wacker Neuson Group almost equaled its record revenue from the prior-year quarter. In light of increased market uncertainties and volatility for H2, the Group revised its forecast for 2016.
Revenue in Q2 2016 almost matches previous year’s record high
Group revenue for the second quarter of 2016 amounted to EUR 381.4 million and was thus almost equal to the record figure reported the previous year (Q2 2015: EUR 382.1 million). Adjusted to discount currency effects, this corresponds to an increase of 2 %. Second quarter revenue grew 21 % relative to the first quarter of the year (Q1 2016: EUR 316.4 million).
“We have every reason to be satisfied with our performance in the second quarter of 2016 in light of the ongoing crises in the agricultural and energy sectors in our home markets of North America and Europe, as well as increasing uncertainty in the UK, South Africa, Poland, Russia and Turkey, coupled with the difficult situation in South America and Australia,” explains Cem Peksaglam, CEO of Wacker Neuson SE.“ The Group generates a large share of its revenue in Europe. Here, revenue for the second quarter rose 6 % compared with the previous year. Revenue in the Americas and Asia-Pacific regions fell by 14 and 31 % respectively compared with the previous year.
Earnings before interest and tax (EBIT) remained almost unchanged from the previous year at EUR 33.4 million (Q2 2015: EUR 34.0 million). The EBIT margin amounted to 8.8 % (Q2 2015: 8.9 %). Profitability was thus significantly higher than in the first quarter of 2016, when the EBIT margin amounted to 5.5 %. Profitability was bolstered by the rise in revenue relative to the first quarter (+21 %).
First quarter results impact half-year profit
In the first half of the year, Group revenue came to EUR 697.8 million (H1 2015: EUR 706.4 million). Performance across the business segments varied significantly. At 52 %, the compact equipment segment accounted for the lion’s share of revenue. At the close of the first six months, revenue for the segment was at the same level as the prior-year period. In contrast, light equipment revenue fell 5 % and accounted for 29 % of Group revenue. Revenue for the services segment, which includes the Group's repair and spare parts business, increased 3 % compared with the prior-year quarter. This segment thus accounted for 19 % of revenue.
Primarily due to the fall in earnings in the first quarter of 2016, EBIT decreased 23 % in the first half relative to the previous year to reach EUR 50.7 million, which placed the EBIT margin at 7.3 % (H1 2015: EUR 65.7 million; 9.3 %). The crises in the energy and agricultural sectors in particular are having a negative impact on earnings, not least because they are causing a strong shift in Wacker Neuson’s regional and product mix. Profit for the period came to EUR 33.8 million in the first half-year (H1 2015: EUR 45.2 million). This corresponds to earnings per share of EUR 0.48 (H1 2015: EUR 0.64).
Improved cash flow
Cash flow from operating activities amounted to EUR 35.7 million in the first six months of the year and was thus considerably higher than the prior year (H1 2015: EUR 11.5 million). Working capital fell 6 % relative to the previous year. This was primarily due to the planned reduction of inventory by 10 %. Free cash flow came to EUR -24.5 million (H1 2015: EUR -43.2 million). The company expects free cash flow for 2016 to be positive.
Internationalization is a cornerstone of Group strategy
The Group opened its assembly plant in Itatiba, São Paulo (Brazil) in April. The facility is manufacturing mobile generators for the regional market, currently at a small scale. In June, the Group signed agreements for the construction of a new production facility in China. The site is located in the city of Pinghu, around 30 km from Shanghai. Compact excavators will be manufactured for the local market from 2018 onwards.
Forecasts for 2016 adjusted
Many recent political and economic events have created considerable uncertainty and volatility on global markets. “These challenging market conditions are having a significant impact on our customers across the globe and require exceptional initiative and flexibility from us,” adds Peksaglam. “High volatility and growing uncertainties in the ag and construction business, increased risks in some European markets and the persistent market weaknesses in North America and Australia, forced us to lower our expectations for the second half“, explains Peksaglam.
In light of these developments, the Executive Board has lowered its forecast for the year as a whole. It now expects revenue to amount to between EUR 1,375 and EUR 1,425 million (previously: EUR 1,400 to 1,450 million) and the EBIT margin to move between 6.5 and 7.5 % (previously: 7.0 and 8.0 %). The Group has earmarked around EUR 100 million in total for investments throughout fiscal 2016 (2015: EUR 118 million).
The complete half-year report is available online at
http://wackerneusongroup.com/en/investor-relations/financial-reports-presentations/2016/.
CONTACT
Wacker Neuson SE
Preußenstr. 41
80809 München/Germany
+44 2838840671
