Wacker Neuson SE: Wacker Neuson Group: Market squeeze in third quarter of 2015

DGAP-News: Wacker Neuson SE / Key word(s): 9-month figures/Preliminary Results

2015-10-21 / 18:35

Wacker Neuson Group: Market squeeze in third quarter of 2015

(Munich, October 21, 2015) Global manufacturer of light and compact equipment, the Wacker Neuson Group, reported a new record revenue of over EUR 1 billion for the first nine months of 2015. The market experienced a sharp, unexpected squeeze, however, in Q3. The company revised its forecast for the year downwards as a result of this development; however, it still expects to report record revenue for 2015.

High levels of volatility in 2015
Based on preliminary figures, Group revenue for the first nine months of 2015 rose 8.7 percent relative to the prior year to reach EUR 1,017.4 million (9M 2014: EUR 936.2 million). Adjusted to discount currency effects, this corresponds to 4.0 percent. Profit before interest and tax (EBIT) fell 21.5 percent to EUR 81.2 million (9M 2014: EUR 103.5 million). The EBIT margin thus amounted to 8.0 percent (9M 2014: 11.1 percent). "Revenue for the first quarter of the year rose by an impressive 11 percent and by an even stronger 16 percent in Q2. This was followed by an unexpectedly pronounced slowdown in demand in the third quarter. Revenue in September fell markedly compared with the previous year. As a result, revenue for the third quarter lies below the same figure for the previous year, which was a strong period for the Group. Nevertheless, this is the first year that we have been able to report revenue in excess of EUR 1 billion for the first nine months of the year," explains Cem Peksaglam, CEO of Wacker Neuson SE.

Varied performance across segments
In Europe, revenue for the first nine months of the year rose 6.0 percent compared with the previous year. At 72 percent, this region accounts for the lion's share of total revenue. Currency effects had a major impact on performance in the Americas and Asia-Pacific. In the Americas, the Wacker Neuson Group reported nominal revenue growth of 15.4 percent. When adjusted to discount currency effects, revenue for this region remained at the same level as the previous year. Revenue for Asia-Pacific was 22.6 percent higher than the figure reported last year (+12.0 percent when adjusted to discount currency effects).

Revenue for the compact equipment segment increased by 14.8 percent relative to the previous year (+13.3 percent when adjusted to discount currency effects). Revenue from light equipment increased by 3.6 percent (-5.3 percent when adjusted to discount currency effects). Revenue for the services segment, which includes the repair and spare parts business, increased 4.3 percent relative to the previous year. When adjusted to discount currency effects, revenue remained at the same level as the prior year.

Downturn in Q3 2015
Preliminary Group revenue for Q3 2015 was 1.6 percent lower than the previous year's figure at EUR 311.0 million (Q3 2014: EUR 316.2 million). Adjusted to discount currency effects, this corresponds to a decrease of 4.4 percent. Revenue and profit were negatively impacted by a drop in demand in developing markets and in target markets dependent on raw material prices (for example, Canada, the US, Australia, Chile and South Africa). This drop in demand was more pronounced in Q3 than the first half of 2015. Demand in Europe continued to fall in France and Russia. In the first half of 2015, the company did not feel the effects of the current crisis in the agricultural sector. In Q3, however, a tangible reluctance to invest in agricultural equipment impacted Group business, in particular sales of loading equipment in Europe. "During the first half of the year, and in the second quarter in particular, there were signs that many crisis-hit markets were starting to recover. The third quarter, however, showed us just how volatile the situation is at the moment. This trend was especially pronounced in September. It is particularly disappointing that we are now feeling the effects of the crisis in the agricultural sector, compounding weak market performance in construction, raw materials and energy. Demand is falling in emerging and mature economies alike and so we can no longer view these crises as being restricted to specific regions," adds Peksaglam.

The fall in revenue in the third quarter of 2015 had a negative impact on profit margins cost ratio. EBIT for the third quarter decreased by 61.3 percent to EUR 15.5 million (Q3 2014: EUR 40.1 million). This corresponds to an EBIT margin of 5.0 percent (Q3 2014: 12.7 percent). In the third quarter, the Group implemented appropriate measures to adapt its cost structures. These will show initial results in the fourth quarter. The equivalent quarter in 2014 was a record quarter for the Group in terms of revenue and profit. In addition, profit in this prior-year period was tangibly bolstered by a more favorable regional and product mix plus beneficial exchange rate developments.

Growth forecast for 2015 revised
The Group recently adjusted its forecast for the current year as a result of these latest business developments. "We do not believe that we will be able to fully compensate for market downturns during the fourth quarter. This has led us to revise our revenue and profit forecasts. Our performance in recent years, however, shows that Wacker Neuson remains ideally positioned, both strategically and operationally, to master current and also future market challenges," concludes Peksaglam confidently.

The company expects Group revenue to amount to between EUR 1.35 and 1.40 billion (2014: EUR 1.28 billion) and the EBIT margin to range between 7.0 and 8.0 percent (2014: 10.6 percent). The Group still expects free cash flow for the year to be positive.

The company will be publishing its nine-month report on November 12, 2015. It plans to issue its forecast for the coming year in March 2016 when it publishes its results for 2015.

Table: Revenue and profit (preliminary figures)

Key figures
In EUR million
Q3/15Q3/14Change (adjusted for currency effects)9M/159M/14Change (adjusted for currency effects)
Revenue311.0316.2-1.6% (-4.4%)1,017.4936.28.7% (4.0%)
EBIT margin as a %5.012.7-7.7PP8.011.1-3.1 PP
Revenue by segment      
Europe220.4230.1-4.2% (-4.3%)730.7689.36.0% (5.3%)
Americas79.276.83.1% (-7.4%)254.1220.215.4% (-0.3%)
Asia-Pacific11.49.322.6% (19.8%)32.626.622.6% (12.0%)
Light equipment107.2105.91.2% (-4.8%)320.4309.33.6% (-5.3%)
Compact equipment136.4144.2-5.4% (-5.8%)506.6441.414.8% (13.3%)
Services73.770.74.2% (1.0%)207.1198.54.3% (0.2%)

Your contact at Wacker Neuson:
Katrin Yvonne Neuffer
Head of Corporate Communication /
Investor Relations
Preussenstrasse 41
80809 Munich
Tel. +49-(0)89-35402-173

About the Wacker Neuson Group
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, global 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 and energy. In 2014, the Group achieved
revenue of EUR 1.28 billion, employing over 4,500 people worldwide.

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