20.03.2018

Steep profit rise for Wacker Neuson

Telehandler manufacturer Wacker Neuson has published its full year results for 2017, showing a steep rise in profitability.

Full year revenues were up 13 percent to €1.53 billion, thanks to strong growth in both Europe, where sales increased 11 percent to €1.13 billion and the Americas where revenues climbed 23 percent to €357.5 million. Sales in Asia Pacific declined five percent to €46.6 million. Sales of Compact Equipment, which includes the telescopic handler product line were 15 percent higher at €817.6 million. Pre-tax profits jumped 54 percent in the year to €125.4 million.

Chief executive Martin Lehner said: “We were able to further expand our market reach at national and international level and gain new market shares. Revenue for Europe, which is the group’s largest market with a 74 percent share of revenue, grew 11 percent and once again, Germany was the strongest revenue driver here. The group has a particularly strong market position in the country thanks to its dense network of branch offices that includes more than 60 of its own sales and service stations flanked by a supporting network of dealers. This trend was reflected across the region with the broad majority of European countries contributing to healthy revenue growth. France, Poland and Austria performed particularly well here.”

“Revenue growth in the agricultural sector was dampened by the termination of the OEM collaboration with agricultural equipment manufacturer Claas, but the new partnership with John Deere has already started to show positive results.”
In the Americas, revenue grew at an even faster pace, driven by worksite technology products as well as skid steer loaders manufactured in the USA and compact equipment imported from Europe.”

“Revenue for the Asia Pacific region decreased five percent as the group experienced a drop in revenue in China due to a one off effect – the initial stocking of new dealers with compact equipment increased the comparative baseline of 2016. In contrast, revenue in Australia and New Zealand increased significantly.”

“The strong rise in revenue across the group had an above average impact on profit thanks to substantial economies of scale and the group’s continued commitment to its efficient cost structure.”

“Free cash flow for fiscal 2017 nearly trebled to a new record high of €99 million, alongside the increase in profit, the group’s efforts to reduce net working capital also had an impact here. Expressed as a percentage of revenue, net working capital decreased tangibly from approximately 42 percent to approximately 36 percent in 2017. This trend was fuelled by the Group’s targeted efforts to sell off old stock and significant improvements to its inventory structure.”

“During 2018, the group will incorporate two of its 10 production plants into existing facilities. The US factory in Norton Shores, Michigan, will relocate to the much larger facility in Menomonee Falls, Wisconsin. The light equipment production plant in the Philippines will be moved to the new factory in China. Furthermore, the two logistics companies will be incorporated into the production company in Germany and the sales company in the US.”

“The group is optimistic about 2018, our markets are currently intact, and forecasts give us every reason to be confident. The year also got off to a great start for us. We expect revenue to amount to between €1.65 and €1.7 billion. This represents an increase of eight to 11 percent relative to 2017. We also expect the EBIT margin to improve to between nine and 10 percent.”

Vertikal Comment

Wacker Neuson continues to do well as its compact products become more widely appreciated, the company has recruited a number of new telehandler engineers and if as expected it expands the product line and production capacity it is likely to continue to gain market share at a steady pace.

It will also be interesting to see how the relationship with John Deere works out, it has plenty of promise, but agricultural dealers are a cautious bunch and have already adopted other telehandler brands following John Deere’s exit from this market in 2006 See John Deere withdraws from telehandler market.

The company has some real momentum behind it and plenty of room for expansion, so expect it to achieve the top end of its revenue forecasts for 2018.