Another year of revenue growth for Wacker Neuson

The light and compact construction equipment manufacturer again reported growth in revenue for fiscal 2015, despite difficult market conditions. The company’s profit levels, however, were affected by crises in key industries and regions. The company has issued a cautious revenue and earnings forecast for 2016.
Rainer Sturm, pixelio.de
Rainer Sturm, pixelio.de

The company reported revenue of 1.38 billion Euro for 2015, which is a rise of 7 percent relative to the previous year (2014: 1.28 billion Euro).

Business performance in 2015 mirrored the high levels of volatility that shaped various industries. During the first half of the year, revenue developed very positively, growing 14 percent relative to the previous year. However, the situation declined markedly in the second half of the year, with revenue just 0.7 percent higher than the prior-year level.

The continued slump in the raw materials industry negatively impacted key sales markets for the Group in Brazil, Chile, Russia, South Africa, Canada, the US and Australia. “The oil and gas industry is currently facing an existential crisis and many companies have already been forced to cease operations. This is an important sector for us in North America. The crisis has been largely triggered by the squeeze on oil prices, which dropped to a ten-year low, making it impossible for companies to cost-effectively extract raw materials in this region,” explains Cem Peksaglam, CEO of Wacker Neuson SE.

The downturn in the agricultural equipment sector left its mark on the compact equipment segment. “During the first half of 2015, we were able to buck the trend and remain on a growth path. By the second half of the year, however, our agricultural business in Europe with wheel loaders, telescopic handlers and tele wheel loaders contracted sharply,” continues Peksaglam. This was mainly due to the drop in prices for milk and other agricultural products, which are currently at a six-year low and, as a result, are dampening willingness to invest amongst agricultural landholders.

Nevertheless, the compact equipment segment again proved to be the main growth driver in 2015, with revenue increasing by 15 percent. Revenue from light equipment was one percent below the prior-year figure. When adjusted to discount currency effects, it actually contracted by 9 percent. In the services segment, which includes the service and spare parts business, revenue grew by 4 percent. Compact equipment accounted overall for around 50 percent of Group revenue, light equipment for 30 percent and the services segment for 20 percent.

Despite cautious expectations for 2016, the Group aims to remain on its expansion path. “Unfortunately, the weak growth in Q4 2015 continued into the first weeks of 2016. The agricultural and energy sectors are still distressed and we do not expect this situation to improve permanently in the coming months,” elaborates Peksaglam. “In North America, we do not expect to see any significant growth impetus until the second half of the year at the earliest due to the oil and gas crisis, which is having a negative impact on the light and compact construction equipment business. In Europe, the picture for 2016 is more positive for us, at least in the construction sector. Current order intake for compact equipment is promising here.”

The Group expects revenue for 2016 to amount to between EUR 1.40 and EUR 1.45 billion (which corresponds to revenue growth of 2 to 5 percent relative to the previous year). The EBIT margin is expected to lie within a range of 7 to 8 percent (same as the previous year). Furthermore, the Group has earmarked around EUR 100 million for investments (2015: EUR 118 million).

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.