Wacker Neuson reports strong third quarter for 2017
Strong revenue and earnings in Q3 2017
The Wacker Neuson Group reported revenue of EUR 378.7 million for the third quarter of 2017. This corresponds to an increase of 20 percent relative to the previous year (Q3/16: EUR 315.7 million). “There is no doubt that we were buoyed by strong markets in North America and Europe. However, it was the successful implementation of our growth strategy that really enabled us to outgrow the market,” explains Martin Lehner, CEO of the Wacker Neuson Group.
Profit before interest and tax (EBIT) nearly doubled to reach EUR 40.0 million (Q3/16: EUR 20.4 million), resulting in an EBIT margin of 10.6 percent (Q3/16: 6.5 percent).
The third quarter is typically a high-margin period and all three operational business segments (light equipment, compact equipment and services) reported a rise in revenue relative to the prior-year quarter. Revenue in the light equipment segment rose 14 percent, while the compact equipment and services segments reported increases of 27 percent and 11 percent respectively. “The need among international rental companies to catch up on equipment stock levels fueled a significant increase in sales of light equipment, especially of generators and light towers. Growth in the compact equipment segment was driven by our ongoing success in the material handling business field in the European construction and agricultural sectors as well as by an expected upswing in sales of skid steer loaders manufactured in North America,” adds Martin Lehner.
The Group’s largest market, Europe – which accounts for around 75 percent of revenue – reported a 17-percent rise in revenue for the third quarter compared with the prior-year period. Business here developed particularly well in Germany, Austria and Switzerland as well as in the Benelux countries, France and Poland. Southern European countries also contributed to growth. Revenue remained on a strong growth path in the Americas. This region reported major revenue gains in worksite technology, skid steer loaders produced in the US, and compact equipment imported from Europe. In the third quarter, revenue for the region increased by 32 percent relative to the previous year. The US, Canada and most South American countries reported revenue gains. In Asia-Pacific, revenue for the third quarter rose 14 percent, with Australia emerging as the main growth driver. The Group is currently building a new factory for compact equipment in the Chinese city of Pinghu, near Shanghai. It plans to start manufacturing compact excavators for the Chinese market here from the first quarter of 2018 onwards.
Record revenue in the first nine months of 2017
Revenue for the first nine months of the year rose 13 percent to reach a new record high of EUR 1,142.4 million (9M/16: EUR 1,013.5 million). EBIT improved 42 percent to EUR 101.0 million while the EBIT margin amounted to 8.8 percent (9M/16: EUR 71.1 million; 7.0 percent). Revenue growth, internal process improvements and strict cost control measures all had a positive impact on earnings. In addition, some of the projects initiated in the last two years to improve the Group’s competitive position are starting to show dividends. These include the relocation of skid steer loader production from Austria to the US, and investments in innovations such as a fully electric zero emission portfolio of light and compact equipment.
Measures aimed at reducing net working capital take effect
The initiatives aimed at optimizing capital tied up are increasingly paying dividends. At the reporting date of September 30, 2017, the ratio of net working capital to annualized revenue for the third quarter fell from 45 percent in the previous year to 37 percent. Inventory turnaround was also reduced to 151 days, which is an improvement of 16 percent.
Strong free cash flow
Fueled by strong profit before tax and an improved net working capital structure, cash flow from operating activities rose 26 percent to EUR 74 million (Q3/16: EUR 59 million). At EUR 50 million, free cash flow improved 46 percent relative to the prior-year quarter (Q3/16: EUR 35 million).
Forecast for 2017
“Our order books are full and we expect business to continue on its positive trajectory through the end of the year,” explains Martin Lehner.
The company has reaffirmed its revenue forecast for the year as a whole. It now expects revenue for fiscal 2017 to come in at the higher end of its previous forecast range of EUR 1.45 to 1.50 billion or possibly even to exceed this figure slightly. This corresponds to a rise of more than 10 percent compared with the previous year (previously 7 to 10 percent). The EBIT margin is also expected to reach the upper end of the current forecast of 7.5 to 8.5 percent.
This forecast does not yet include potential one-off earnings from the sale of a real-estate company held by the Group, which is expected to generate income in the mid-double-digit million euro range. The realization of this profit may also shift into 2018 depending on official approvals. Group revenue for the previous year amounted to EUR 1.36 billion and the EBIT margin came in at 6.5 percent.
The Q3 report for 2017 is available online at: http://wackerneusongroup.com/en/investor-relations/financial-reports-presentations/2017/.
Table: Revenue and earnings
|EBIT margin as a %||10.6||6.5||+4.1 PP||8.8||7.0||+1.8 PP|
|Profit for the period||31.9||12.1||+164%||71.0||46.2||+54%|
|Earnings per share in €||0.46||0.17||+171%||1.01||0.65||+55%|
In brackets: Adjusted to discount one-off effects.
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Wacker Neuson SE
Katrin Yvonne Neuffer
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80809 Munich, Germany
About Wacker Neuson
The Wacker Neuson Group is an international family of companies and a leading manufacturer of light and compact equipment with over 50 affiliates and 140 sales and service stations. The Group offers its customers a broad portfolio of products, a wide range of services and an efficient spare parts service. The product brands Wacker Neuson, Kramer and Weidemann belong to the Wacker Neuson Group. Wacker Neuson is the partner of choice among professional users in construction, gardening, landscaping and agriculture, as well as among municipal bodies and companies in industries such as recycling, energy and rail transport. In 2016, the Group achieved revenue of EUR 1.36 billion, employing around 5,000 people worldwide. www.wackerneusongroup.com