Wacker Neuson cautious for H2 despite a strong second quarter

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In the second quarter of 2016, leading international light and compact equipment manufacturer Wacker Neuson Group almost equaled its record revenue from the prior-year quarter. In light of increased market uncertainties and volatility for H2, the group revised its forecast for 2016.

Group revenue for the Q2 2016 amounted to €381.4m and was thus almost equal to the record figure reported the previous year (Q2 2015 – €382.1m). Adjusted to discount currency effects, this corresponds to an increase of 2%. Second quarter revenue grew 21% relative to the first quarter of the year (Q1 2016 – €316.4m).

“We have every reason to be satisfied with our performance in the second quarter of 2016 in light of the ongoing crises in the agricultural and energy sectors in our home markets of North America and Europe, as well as increasing uncertainty in the UK, South Africa, Poland, Russia and Turkey, coupled with the difficult situation in South America and Australia,” explained Cem Peksaglam, CEO of Wacker Neuson SE.

The group generates a large share of its revenue in Europe, where revenue for the second quarter rose 6% compared with the previous year. Revenue in the Americas and Asia-Pacific regions fell by 14 and 31% respectively compared with the previous year.

In the first half of the year, Wacker Neuson Group revenue came to €697.8m (H1 2015 – €706.4m). Performance across the business segments varied significantly. At 52%, the compact equipment segment accounted for the lion’s share of revenue.

At the close of the first six months, revenue for the segment was at the same level as the prior-year period. In contrast, light equipment revenue fell 5% and accounted for 29% of group revenue. Revenue for the services segment, which includes the group’s repair and spare parts business, increased 3% compared with the prior-year quarter. This segment thus accounted for 19% of revenue.

The crises in the energy and agricultural sectors in particular are having a negative impact on earnings, not least because they are causing a strong shift in Wacker Neuson’s regional and product mix. Profit for the period came to €33.8m in the first half-year (H1 2015 – €45.2m). This corresponds to earnings per share of €0.48 (H1 2015 – €0.64).

Many recent political and economic events have created considerable uncertainty and volatility on global markets. “These challenging market conditions are having a significant impact on our customers across the globe and require exceptional initiative and flexibility from us,” added Peksaglam.

“High volatility and growing uncertainties in the ag and construction business, increased risks in some European markets and the persistent market weaknesses in North America and Australia, forced us to lower our expectations for the second half,” explained Peksaglam.

In light of these developments, the executive board lowered its forecast for the year as a whole. It now expects revenue to amount to between €1,375m and €1,425m (previously: €1,400m to €1,450m) and the EBIT margin to move between 6.5% and 7.5% (previously 7.0% and 8.0%). The group has earmarked around €100m in total for investments throughout fiscal 2016 (2015 – €118m).

The complete half-year report is available online www.wacherneusongroup.com.

August 5, 2016

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Tom Stone is Editor of the iVT brand – which includes digital and print editions of a quarterly magazine, Off-Highway Annual, and the Advanced Lift-truck supplement, as well as the iVT website ivtinternational.com, which is updated daily with industry news, exclusive features and expert opinion. During his time at the helm of iVT Tom has met and interviewed some of the world's leading industrial vehicle OEM presidents, CEOs and MDs, and takes great pride in cementing iVT's place as the leading forum for debate within the industry, a reputation that his been built up over the brand's 25-year history.

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