Wacker Neuson Group confident for 2016 – Industry News

During the first quarter of 2016, international light and compact equipment manufacturer Wacker Neuson continued to feel the impact of difficult conditions across many of its markets, in particular in the Americas region. Although the Group managed to maintain revenue at almost the same level as the record-breaking prior-year quarter, it reported lower profit figures for the period. The world’s largest construction equipment trade show, Bauma, held in Munich in April, proved a great success for the Group.

Company management has confirmed its forecast for fiscal 2016. Revenue is at almost the same record-breaking level as the previous year. Group revenue for the first quarter of 2016 amounted to EUR 316.4 million. This is just 2% below the record revenue reported for the prior-year period (Q1/15: EUR 324.3 million). Adjusted to discount currency effects, this corresponds to a drop of just 1%.

Key markets remained in a state of crisis, as Cem Peksaglam chief executive officer of Wacker Neuson SE, explains: “In North America, the ongoing slump in demand in the raw materials and energy sectors negatively impacted our business, particularly in the worksite technology field. South America, and Brazil in particular, continues to be hit by political and economic uncertainties and shows no signs of picking up. By contrast, demand was high in the construction sector in central and northern Europe, and southern European countries improved on the previous year’s performance. However, as expected, trade in compact equipment for the agricultural sector remained below the prior-year level. This is due to extremely low prices for foodstuffs, above all milk.”

At 72%, Europe accounts for a very large share of Group revenue. Revenue for this region was 2% down on the previous year. Here, the Group was able to almost fully compensate for the downturn it experienced in demand for agricultural equipment. Revenue for the first quarter in the Americas region fell 15%, primarily due to the crisis in the oil and gas sector. Delays in the production of compact equipment in the US further impacted revenue for this region. In addition, the dollar’s relatively strong rating had a dampening effect on the export of products manufactured at the Group’s North American plants.

By contrast, the Group reported strong growth in the Asia-Pacific region, where revenue almost doubled. “Our business in Asia developed very positively, even allowing for the favourable effect of one-off items on first-quarter revenue growth and we expect these to balance out over the course of the year. Whereas demand for large machines is contracting overall in China, the market for our compact machinery is on a clear growth path,” continues Peksaglam. The Australian economy, which is highly dependent on raw material prices, continued to suffer from the crisis in the mining industry. Overall, the whole region increased its share of total Group revenue by 2.7 percentage points relative to the previous year to reach 5.5%.

Trends in the business segments
At 51%, the compact equipment segment accounts for the largest share of Group revenue. Revenue for this segment was almost at the same high level as the previous year. By contrast, revenue for the light equipment segment contracted by 8% due to the downturn in the oil and gas sector as well as ongoing crises in some emerging markets. This segment accounted for 29% of Group revenue in the first quarter. Revenue for the services segment, which covers the Group’s repair and spare parts business, increased 2% compared to the prior-year quarter. The segment thus accounted for 20% of revenue.

Bauma 2016 a resounding success for the Group
The Group unveiled a number of new product innovations to customers at bauma in Munich in April of this year, all of which were extremely well received. The new Kramer 5055e electric wheel loader – the first fully electric all-wheel drive wheel loader – won the “Bauma Innovation Award” in the Machinery category. Wacker Neuson was also awarded the Euro Test Award by Berufsgenossenschaft Bau (the statutory accident insurance and prevention association for the German construction industry) for its battery-powered rammers. The jury was particularly impressed with the rammers’ outstanding contribution to health and safety.

Growth forecast for 2016 confirmed
“The current order situation, a positive business trend in Europe, infrastructure programmes in Germany, plus the positive mood evident among many national and international customers at the Bauma trade show indicate that business over the rest of the year, in particular the second half of the year, could compensate for a weak start in the first quarter,” adds Peksaglam.