Wacker Neuson stays black
Telehandler manufacturer Wacker Neuson has reported a challenging first half, but remains profitable.
Revenues for the six months to the end of June were €796.7 million, 16.4 percent below the same period last year. Much of the reduction occurred in North America however, with European sales just 8.8 percent down on the year to €631.4 million.
Sales in Germany, Austria and Switzerland held up better thanks to the company’s direct sales network, along with service and rental activities, while France, the UK and Southern European countries were hit harder. Sales to the agricultural sector actually improved slightly! Revenues in the Americas however dropped 38 percent to €143.4 million, most due to rental companies holding off on capital expenditure.
Pre-tax profits for the six months dipped 54 percent to €36.6 million. Net debt however was cut by 25 percent to €363.1 million.
In the second quarter revenues were 25.4 percent lower at €385.9 million, while pre-tax profits were 60 percent lower at €19.9 million.
Chief executive Martin Lehner said: “After a positive start to fiscal 2020, the economic situation took a sharp downturn from the middle of March onwards due to the rapid spread of the coronavirus. Widespread lockdowns created extremely challenging conditions for our business and disrupted supply chains. Interruptions to our customers’ construction activity and the high degree of uncertainty surrounding the future development of the pandemic had a clearly negative impact on investment behaviour in the industry.”
“The Covid-19 pandemic dominated the economy and everyday life in the first half of 2020 and also clearly shaped business developments at the Wacker Neuson Group. Revenue fell about 16 percent relative to the prior year period, although developments varied from one region to another. In Europe, thanks to our strong direct sales network, we were able to flexibly offer rental, sales and service solutions to the evolving needs of our customers during the pandemic, especially in Germany, Austria and Switzerland. The comparatively stable agricultural business further bolstered our performance overall and we even succeeded in achieving slight growth in this segment relative to the previous year.”
“In China, the impact of the coronavirus was largely felt in the first quarter of the year and we managed to almost fully reverse production restrictions from April onwards, and to return to our growth path in the second quarter. The Americas region has been hit hardest by the coronavirus crisis. Key accounts such as rental chains in particular are freezing investments. Infection rates remain high in the region and we expect to see the highest levels of uncertainty there over the coming months.”
“To manage the challenges posed by the crisis, we implemented a number of key measures early on to protect the health of our employees, secure our delivery capabilities to our customers and strengthen our liquidity position. In addition, we were able to shore up the Group’s profitability in the crisis and achieved an EBIT margin of 6.3 percent by applying tight cost control, using up hours in flextime accounts, pulling forward plant holidays and realizing first positive effects from our program to decrease costs and increase efficiency, which we presented back in January. Thanks to a significant drop in inventory, we also succeeded in achieving free cash flow of EUR 93 million.”
“The first six months of the year presented us all with big tasks. These included changes in working conditions, rigorous protective and hygiene measures, working from home and the daunting task of balancing work with childcare. On top of this, we were called upon to embrace new formats such as a virtual AGM. However, the crisis has also shown us that we have the flexibility, creativity and perseverance to ensure non-stop service for our customers. We would like to thank all of our employees for making this happen. We also thank our shareholders and business partners for their trust and support in these difficult times. Stay safe!"
All in all Wacker Neuson has fared better than most and remains both profitable and cash positive having generated sufficient funds to pay down debt. However it has had to lose around 14 percent of its global workforce which stood at 5,502 as of the end of June.
The company still has plenty of scope for further expansion and looks set to pull through the crisis in reasonably good shape.