During the first quarter of 2016, international light and compact equipment manufacturer 1651 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. Company management confirmed its forecast for fiscal 2016.
Group revenue for the first quarter of 2016 amounted to €316.4 million. This is just 2% below the record revenue reported for the prior-year period (Q1/15: €324.3 million). Adjusted to discount currency effects, this corresponds to a drop of just 1%.
Profit before interest and tax (EBIT) in the first quarter of 2016 fell 45% relative to the prior-year period to reach €17.3 million. As a result, the EBIT margin dropped to 5.5% (Q1/15: €31.7 million; 9.8%). Profit for the period amounted to €11.1 million (Q1/15: €21.3 million).
The group still expects 2016 revenue of between €1.4-1.45 billion, which corresponds to an increase of 2-5% relative to the previous year. The group has earmarked around €100 million for investment for fiscal 2016 (2015: €118 million).
Key markets remained in a state of crisis, said Cem Peksaglam, chief executive of Wacker Neuson. “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.”
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 favorable 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,” said 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% relative to the previous year to reach 5.5%.
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% 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 accounted for 20%of revenue.
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. Company management confirmed its forecast for fiscal 2016.
Group revenue for the first quarter of 2016 amounted to €316.4 million. This is just 2% below the record revenue reported for the prior-year period (Q1/15: €324.3 million). Adjusted to discount currency effects, this corresponds to a drop of just 1%.
Profit before interest and tax (EBIT) in the first quarter of 2016 fell 45% relative to the prior-year period to reach €17.3 million. As a result, the EBIT margin dropped to 5.5% (Q1/15: €31.7 million; 9.8%). Profit for the period amounted to €11.1 million (Q1/15: €21.3 million).
The group still expects 2016 revenue of between €1.4-1.45 billion, which corresponds to an increase of 2-5% relative to the previous year. The group has earmarked around €100 million for investment for fiscal 2016 (2015: €118 million).
Key markets remained in a state of crisis, said Cem Peksaglam, chief executive of Wacker Neuson. “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.”
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 favorable 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,” said 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% relative to the previous year to reach 5.5%.
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% 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 accounted for 20%of revenue.
