Compact construction machinery firm Wacker Neuson says that it has seen a successful start to 2021, with a sharp rise in profitability For the first quarter, revenue increased by 5.6% to €434 million over the €410.8 million of the previous year. Adjusted for currency effects, this corresponds to an increase of 7.4%.
There was a 51% rise in EBIT to €43.6 million, compared with €28.9 million for the same period in 2020. The EBIT margin amounted to 10%, while the net working capital ratio was close to the strategic target at 31%.
Meanwhile, cash flow from operating activities was slightly higher than the level seen in the first quarter of 2020, net financial debt remains at a very low level and there has been a dynamic trend in the firm’s order intake.
“The first quarter got the year off to an exceptionally successful start for us. We are back on our growth path with a sharp rise in profitability too,” explained Kurt Helletzgruber, CEO and CFO of the Wacker Neuson Group. “Our strong performance over these first three months gives us an excellent foundation for achieving our goals for the year. At the same time, demand for our products continues to develop dynamically.”
Revenue for Europe for the first quarter rose 7% relative to the previous year to reach €349.2 million, compared with €326.4 million for the same period in 2020. Business developed particularly well in DACH countries, Eastern Europe, Benelux and the UK. Group revenue grew in particular with excavators, dumpers and compaction equipment. The services segment also reported above-average gains.
Revenue in the Americas region in the first quarter amounted to €68.3 million, compared with €76.9 million in 2020, a decrease of 11.2%. Adjusted for currency effects, revenue for the region contracted by 4.3%. Customers remained cautious about investments at the start of the year in particular. However, business picked up markedly towards the end of the first quarter. Demand from dealers and rental chains developed positively here.
In Asia-Pacific, Group revenue more than doubled relative to the previous year reaching €16.5 million, compared with €7.5 million in 2020. The Chinese production site and dealer organisation were shut down for several weeks in the previous year due to the rapid spread of coronavirus. Business in Australia and New Zealand developed extremely positively. The Group reported major gains here due to the expansion of its dealer network and a product portfolio tailored to local needs.
Net working capital amounted to €542.7 million at the close of the first quarter and was significantly below the €778.9 million for the previous year. A seasonal build-up of inventory plus a rise in receivables fuelled by dynamic business development resulted in a slight rise in net working capital relative to the close of the year (December 31, 2020: €497.5 million). At 31.3%, the net working capital ratio improved significantly compared with the previous year and was thus within reach of the strategic target value of 30% or lower (March 31, 2020: 47.4%; December 31, 2020: 29.1%) .
At €23.5 million, cash flow from operating activities for the first quarter was slightly higher than the €22.4 million of the previous year. The improvement in profitability was countered by the seasonal increase in net working capital. Before a fixed short-term investment in the amount of €100 million, which was made to optimize the Group’s cash position, free cash flow amounted to €9.8 million, against €4.3 million for the previous year.
Net financial debt at the close of the quarter remained at a very low level at €143.6 million, compared with €446.1 million in 2020.
Order intake developed dynamically for the Group in the first quarter and this trend continued into the start of the second quarter. However, significant uncertainties still overshadow the macroeconomic environment and global supply chains. “Supply chains are currently the largest area of concern for us. Demand from the market is high and topical issues such as pandemic-related restrictions and the blockage of the Suez Canal are resulting in recurring bottlenecks. We have to be extremely flexible with production to ensure we don't miss out on any manufacturing slots,” added Helletzgruber. The situation is further compounded by price increases for raw materials, components and transport.
Christoph Burkhard will become the new CFO of Wacker Neuson with effect as of June 1, 2021. He follows on from Kurt Helletzgruber, who was seconded from the Supervisory Board to the Executive Board and is currently serving as CEO and CFO for an interim period.