Leading OEM Wacker Neuson Group remained on its revenue growth path in the second quarter of 2022. Group revenue for the first half of the year reached a new record of 1,072.5 million Euros, a rise of 15.5% relative to 2021.
Adjusted for currency effects, this corresponds to an increase of 13.2 percent. Profitability remained under pressure against the backdrop of ongoing supply chain strains and persistently high costs for materials, energy and shipping. Earnings before interest and tax (EBIT) fell 12.6 percent to EUR 87.5 million (H1/21: EUR 100.1 million).
The EBIT margin amounted to 8.2 percent, which represents a decline of 260 basis points (H1/21: 10.8 percent). In the second quarter, the EBIT margin improved by 1.3 percentage points relative to the first quarter (Q2/22: 8.8 percent; Q1/22: 7.5 percent).
“Customer demand for our innovative and reliable products remains consistently strong,” said outlines Dr. Karl Tragl, Chairman of the Executive Board and CEO of the Wacker Neuson Group. “Order intake was already at a very high level in the first quarter and this positive momentum accelerated even further in the second quarter. We thus have an order backlog extending well beyond the current fiscal year. However, there are still no signs of improvement in the supply situation, and material, energy and shipping costs remain high – all of which has a negative impact on our profitability. On the other hand, we do expect our price increases to have a positive impact on gross margin from the third quarter onwards.”
Double-digit growth across all regions
Revenue in Europe (EMEA) for the first half-year rose 12.1 percent relative to the previous year, reaching EUR 826.3 million (H1/21: EUR 737.1 million). This growth was driven not only by the Group’s home market of Germany, but also by the major European construction equipment markets of the UK and France, which likewise recorded double-digit growth rates. The Group benefited from strong demand for wheel loaders and dumpers for the construction industry. Wacker Neuson’s own rental and service business also developed on a positive trajectory, as did the high-margin spare parts business. Compact equipment sold under the Kramer and Weidemann brands for the agricultural sector again performed well, with revenue rising 18.7 percent to reach EUR 207.4 million (H1/21: EUR 174.7 million).
The Americas recorded positive demand across all sales channels. Revenue rose significantly, climbing 28.0 percent to EUR 202.8 million in the first half-year (H1/21: EUR 158.4 million). This revenue momentum was accentuated by a weak euro relative to the US dollar. Adjusted for currency effects, revenue rose by 16.8 percent. As part of its plan to diversify its sales strategy, Wacker Neuson on-boarded additional authorized dealers in North America in the first half of 2022.
In Asia-Pacific, revenue increased relative to the previous year by 32.3 percent to EUR 43.4 million (H1/21: EUR 32.8 million). This upturn amounted to 26.8 percent when adjusted for currency effects. There was sustained strong growth in Australia here, but the Group faced a contracting construction equipment market in China. In contrast, the business situation in the Southeast Asian countries and in India developed positively. Machinery produced at the Chinese plant is now increasingly being distributed to export markets such as Africa and South America as well.
Material bottlenecks impact profitability
With the EBIT margin at 8.2 percent, profitability for the first half-year was 2.6 percentage points lower than the previous year (H1/21: 10.8 percent). Persistently high costs for materials, energy and shipping were the main drawdown factor for earnings. At the same time, productivity at the production plants was adversely impacted by machine rework efforts due to material bottlenecks. The increase in revenue levels and the positive development of operating costs were not sufficient to offset this.
Nevertheless, second quarter earnings already showed a clear improvement on the first quarter. At 8.8 percent, the EBIT margin was 1.3 percentage points above the Q1 figure (Q1/22: 7.5 percent). This positive development was evident in both the gross profit and operating costs. The gross profit margin improved 0.7 percentage points (Q2/22: 23.7 percent; Q1/22: 23.0 percent) and operating costs as a percentage of revenue improved 0.4 percentage points (Q2/22: 15.3 percent; Q1/22: 15.7 percent).