Wacker Neuson Reports Strong Business Development in First Half of 2012

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A company press release of August 9 reported that the first quarter of 2012 proved a strong period for Wacker Neuson, especially in its core markets of Europe and North America (EUR 274.0 million, increase of 29 percent on Q1 2011). Revenue continued to grow in the second quarter, rising 7 percent on the prior-year quarter to EUR 284.2 million (Q2 2011: EUR 266.9 million). "Demand in the European construction and agricultural industries slowed during the second quarter, which inevitably dampened revenue growth for this region," explains Cem Peksaglam, CEO of Wacker Neuson SE. "By contrast, strong light and compact equipment sales in the Americas pushed revenue in this region up 23 percent on the previous year's quarter - a result that significantly exceeded our expectations. This development confirms that a broader international footprint enables us to absorb economic fluctuations more effectively."

One event in particular impacted business in Europe during the second quarter, when in May 2012, the Group started production of compact equipment weighing up to 14 tons at its new research and development facility in the Upper Austrian town of Horsching. The relocation together with significant changes to manufacturing processes delayed deliveries of compact equipment and also caused process and logistics costs to rise. All of which dampened revenue and earnings in the second quarter. Workflows have been returning to normal levels as of July, and the Group expects to quickly work through the backlog of orders.

Sharp Rise in Revenue in H1 2012

In the first six months of 2012, Group revenue was up 17 percent at EUR 558.1 million (H1 2011: EUR 478.7 million). Revenue generated by light equipment products such as rammers, plates, rollers, light towers and generators increased by 14 percent relative to the previous year. Revenue in the compact equipment segment (including excavators, wheel loaders, dumpers and skid-steer loaders) rose 23 percent on the previous year. This segment also includes agricultural machinery, which reported a 28 percent rise in revenue. The agricultural sector already accounts for 17 percent of total Group revenue. Revenue in the services segment (spare parts, maintenance, repairs and used equipment sales) rose by 8 percent.

Falling demand in Europe combined with the relocation of production activities to the new facility in Horsching squeezed profit. At EUR 76.1 million, profit before interest, tax, depreciation and amortization (EBITDA) for H1 2012 was 6.3 percent higher than the previous year (H1 2011: EUR 71.6 million). This corresponds to an EBITDA margin of 13.6 percent (H1 2011: 15.0 percent). Profit before interest and tax (EBIT) came to EUR 49.2 million (H1 2011: EUR 48.6 million), resulting in an EBIT margin of 8.8 percent (H1 2011: 10.2 percent). Profit for the period after tax and minority interests amounted to EUR 30.9 million in the first half-year (H1 2011: EUR 31.5 million). At EUR 0.44, earnings per share remained roughly on a par with the previous year (H1 2011: EUR 0.45).

Changes to the Executive Board

Wacker Neuson SE aims to unite its two product segments (light and compact equipment) under single management in order to maximize synergies, in particular with regard to international expansion. This will enable the Group to further build on its market success. This strategy will also result in certain changes at executive level. On September 30, 2012, Richard Mayer will be withdrawing from his position as member of the Executive Board of Wacker Neuson SE responsible for light equipment. Mayer reached a mutual, amicable agreement with the Supervisory Board providing for his early exit from the company.

Martin Lehner will take on responsibility for light equipment at Executive Board level in addition to his current role as head of compact equipment. Lehner has been with the company since 1987 and is also Deputy CEO to Cem Peksaglam.

Aligning the two product segments under a single Executive Board member will not affect segment reporting. The Group will continue to report revenue according to the individual business segments of light equipment, compact equipment and services.

Outlook and Forecast for 2012

By diversifying its portfolio of products and services across additional sectors and industries and expanding its international reach, the Group expects to absorb any downturns in demand in individual countries or regions more effectively. "The increasing success of our active cross-selling strategy across product segments provides positive proof that Wacker Neuson is on the right path here. We remain committed to our goal of exceeding the billion-euro revenue mark this year," states Peksaglam.

The Group has reaffirmed its revenue forecast of around EUR 1.1 billion for 2012. In light of uncertainties surrounding European market developments as well as the negative impact on revenue resulting from the relocation of production activities, the Group now expects the EBITDA margin to level out between 13 and 15 percent. At the start of the year, company management predicted an EBITDA margin of at least 15 percent. In fiscal 2011, Wacker Neuson reported revenue of EUR 991.6 million and an EBITDA margin of 16.4 percent.