Munich-based manufacturer of light and compact equipment, Wacker Neuson, posted a clear profit increase in the second quarter of 2014, with revenue remaining at the same level as the previous year. The Group posted new record revenue and earnings figures for the first six months of the year. The Group has confirmed its forecast for fiscal 2014.
Strong second quarter profit
Wacker Neuson reported revenue of EUR 328.4 million for the second quarter of 2014, bringing the Group close to the record figure reported for the prior-year period (Q2 2013: EUR 329.0 million). Adjusted to discount currency fluctuations, revenue increased by 2 percent. The short, mild winter in Europe meant an early start to the construction season in 2014. Construction companies brought forward a number of investments, resulting in a strong first quarter for Wacker Neuson in 2014 (Q1 2014 revenue: +13 percent on previous year). Wacker Neuson reported a marked increase in earnings compared to the previous year. Profit before interest and tax reached EUR 41.3 million in the second quarter of 2014, an increase of 41 percent compared to the previous year (Q2 2013: EUR 29.3 million). The Group’s EBIT margin thus grew from 8.9 to 12.6 percent, with the EBITDA margin increasing from 13.6 to 17.3 percent.
Record six months in 2014
The first six months of 2014 saw revenue grow by 6 percent on the previous year to EUR 620.0 million (H1 2013: EUR 586.1 million). This was a new record high for the Group. Adjusted to discount currency fluctuations, Wacker Neuson achieved a 9-percent growth in revenue.
Revenue developed particularly well in Europe, while exchange rate fluctuations brought results for the Americas and Asia-Pacific below the previous year’s figures. “We were able to further expand our market position in Europe, boosting revenue here by 10 percent,” explains Cem Peksaglam, CEO of Wacker Neuson SE. “We also reported growth in North America. However, South America and Asia-Pacific developed below our expectations due to falling demand and currency fluctuations.” The compact equipment segment proved to be a key growth driver, with revenue increasing 13 percent. This success is fueled by the Group’s strategy to leverage its existing global sales network in a bid to expand into new markets and strengthen its position in existing markets. “Business with our Weidemann and Kramer branded equipment also developed well. Our success here arises from the fact that our innovative machines are meeting the need to increase efficiency and productivity in the agricultural sector. Our double-digit increase in revenue from agricultural equipment is further confirmation that we are on the right path with our strategy to diversify into this area,” continues Peksaglam. The light equipment segment posted a 5-percent decrease in revenue due to a drop in demand and currency fluctuations. Adjusted to discount these fluctuations, revenue remained slightly above the previous year’s level. Revenue in the services segment grew by 10 percent.
Profit before interest, tax, depreciation and amortization (EBITDA) grew 33 percent to EUR 93.0 million (H1 2013: EUR 69.7 million). This corresponds to an EBITDA margin of 15.0 percent (H1 2013: 11.9 percent). EBIT increased by 57 percent to EUR 63.4 million (H1 2013: EUR 40.4 million), leading to an improved EBIT margin of 10.2 percent (H1 2013: 6.9 percent). These increases in profitability stem from sustainable measures introduced by the Group to lower costs and optimize work processes.
Growth forecast for 2014 confirmed
The Group remains optimistic about the current year. “Strong traction from established markets in Europe and North America, plus the momentum from our current strategy path are all set to benefit our business over the current year,” explains Peksaglam. “Our order books are full and order intake for compact equipment up to the end of June was 30 percent higher than the same time last year.” The Group is still predicting total revenue for the year of EUR 1.25 to 1.30 billion (2013: EUR 1.16 billion). The EBITDA margin should still be on target at 13 to 14 percent (2013: 13.2 percent) with EBIT expected to lie between 8 and 9 percent (2013: 8.2 percent). The Group has earmarked around EUR 85 million (2013: EUR 87 million) for investments in fiscal 2014. EUR 53 million of this has already been invested in the first six months of the year.