The Wacker Neuson Group reported a slight drop in revenue and earnings for the first quarter of 2013 relative to the previous year’s quarter. The company expects business to improve over the course of the year, however.

Squeeze on quarterly revenue
A weak European economy was one of the main factors that dampened demand for light and compact construction equipment in the first quarter of 2013. In addition, the Group’s strong performance in first quarter of 2012 resulted in an above-average baseline for comparison. At EUR 257.1 million, Group revenue for the first three months of the year was down 6 percent on the unusually strong prior-year figure (previous year: EUR 274.0 million). Revenue from the light equipment and compact equipment segments fell by 8 percent and 9 percent respectively. In contrast, the services segment saw revenue rise by 3 percent. As in the previous year’s quarter, agricultural machines accounted for around 17 percent of Group revenue. “Ongoing financial problems across Europe are making it difficult to plan construction projects and making our customers reticent to invest,” states Cem Peksaglam, CEO of Wacker Neuson SE. “Business in the US also developed below our expectations in the first quarter of the year. However, we are confident that things will pick up over the course of the year.” A long winter delayed the start of the construction season in the northern hemisphere. In addition, some customers put investments on hold until April so that they could purchase equipment at or immediately after bauma, the world’s largest construction trade fair.

Core markets in Europe and the Americas below previous year
At around 70 percent, the Europe region continues to account for the lion’s share of revenue. Overall, revenue from Europe was 8 percent down on the prior-year quarter. Revenue from the Americas, the Group’s second largest market, fell by just 2 percent. In the Asia-Pacific region, Wacker Neuson reported a rise in revenue of 2 percent. 

Drop in revenue and one-off items impact profit
The drop in revenue and one-off items had a negative impact on profit figures. Profit before interest, tax, depreciation and amortization (EBITDA) thus fell 36.1 percent in the first three months of the year to EUR 24.8 million. This corresponds to an EBITDA margin of 9.7 percent (prior-year quarter: EUR 38.8 million; EBITDA margin: 14.2 percent). Profit before interest and tax (EBIT) was down at EUR 11.1 million and the EBIT margin fell to 4.3 percent (prior-year quarter: EUR 26.3 million; EBIT margin: 9.6 percent). Profit for the period thus amounted to EUR 6.4 million (prior-year quarter: EUR 17.1 million). “The weak first quarter of 2013 shows just how volatile our industry has become. In 2012, we saw revenue rise by 29 percent whereas this year, we have seen revenue fall. We have to make our production processes even more flexible and leverage synergies more actively across all areas of the Group to absorb these extreme fluctuations more effectively,” adds Peksaglam.

Strategies for further profitable growth in place
Wacker Neuson’s product portfolio enjoys international reach. In the past three years alone, the Group has channeled over EUR 300 million into new production facilities, efficient production processes, sales and service capabilities and ground-breaking product innovations. Wacker Neuson is carving out new growth opportunities by increasing penetration in growth markets, above all South America, Eastern Europe, Africa and Asia. To make the most of this growth potential, it will further tailor its products and services to the conditions and requirements of different regions. Wacker Neuson is also focusing on increasing its presence in established markets such as North America and Europe, which offers growth opportunities even under the current difficult market conditions. “Europe is a very diverse market, varying dramatically from region to region. This is something that all players – from manufacturers through dealers to customers – have to deal with,” explains Peksaglam. “The overall positive mood at bauma together with developments in recent weeks give us every reason to be optimistic about the remainder of the year.” Wacker Neuson is confident that it will make up for the shortfall from the first quarter as the year progresses. The overall forecast for the year remains unchanged, with revenue expected to increase to around EUR 1.2 billion (2012: EUR 1,091 million) overall and the EBITDA margin to exceed 13.0 percent (2012: 13.0 percent).