08.11.2018

Mixed quarter for Wacker Neuson

Telehandler manufacturer Wacker Neuson has reported a strong third quarter in terms of revenues but with lower profits.

Starting with the nine months to the end of September, total revenues were €1.24 billion up nine percent on the same period last year. While pre-tax profits jumped 71 percent to €166.2 million.

Moving on to the third quarter total revenues were 10 percent higher at €415.8 million. Of this sales of Compact Equipment, which includes telehandlers, were €223.8 million a 14 percent increase and now represents 53 percent of the total. Geographically revenues in Europe were 9.5 percent higher, due to higher sales in the UK, as well as in France, Poland and Austria, while Southern Europe continued to improve.

In the Americas revenues improved 10.6 percent thanks to higher sales to rental companies offset by lower sales in South America. Asia-Pacific sales increased 9.9 percent, due to higher sales in China and production ramping up at the company’s new plant in Pinghu, near Shanghai.

Pre-tax profits however declined 2.5 percent to €38.5 million due to bottlenecks in the company’s supply chain negatively impacting production flows in some plants, which increased working capital while negatively affecting cash flow leading to higher finance costs.

The company is though maintaining its full year forecasts and is to close its plant in Michigan, USA and relocate production to its plant in Wisconsin, and at the same time close a plant in the Philippines, reducing the number of production facilities that the company runs from 10 to eight.

The company’s three man senior executive team issued the following statement: “In the third quarter of 2018, Wacker Neuson continued to build on its success from the first half of the year. Strong demand in our core markets and high levels of acceptance for our products fuelled a 10 percent rise in revenue.”

“Bottlenecks in our global supply chain continued to have a dampening effect.
Limited material availability significantly impacted production flows in our
production plants and we are working with our suppliers on a daily basis to
improve the situation. Guided by our Strategy 2022, we are well on the way to making the group a much more streamlined and agile organization. Recent key initiatives here included the closure of our US production plant in Michigan and our plant in the Philippines. Shutting down these sites and integrating the production lines into existing facilities – a process which is still ongoing – has had an additional impact on productivity. However, focusing on eight production plants instead of ten will help us reduce complexity and achieve sustainable profitability gains in the medium term.”

“Our order books are well filled and the most important target markets for our
group continue to develop positively. We have confirmed the revenue and
earnings guidance for full-year 2018 that we published back in March.”

Vertikal Comment

While the profit slip in the third quarter raises a concern, overall Wacker Neuson continues to make solid progress, especially with its compact equipment business. It still has plenty to go after in terms of improving its overall market share almost everywhere, while having huge potential for its telehandler sales, where its current market share is negligible. Its programme with John Deere and its agricultural dealers also has upside potential.

The company makes first class, high quality machines, so growth is down to being able to ramp up production, while marketing and distributing them more widely.

An overall positive result.