Wacker Neuson has reported a new revenue record for the 2019 fiscal year, although profits were lower than for the previous year. The company saw double-digit growth in Group revenue to reach €1.901 billion, a growth of 11.2% from the €1.71 billion of 2019. Adjusted for currency effects, this corresponds to an increase of 9.8%. However, the EBIT margin was 8.1%, a drop of 1.4% from the previous year.
The firm explained that profitability was impacted by inventory streamlining and restructuring in North America. The company also introduced a programme costing €50 million that is intended to reduce costs and improve efficiency.
During 2019 Wacker Neuson Group saw business grow across all regions and business segments. The Group benefited above all from positive trends in European and North American construction markets as well as strong demand for Kramer- and Weidemann-branded equipment.
“Last year, we once again managed to gain shares in many markets – challenging markets included – thanks to our innovative product developments,” explained Martin Lehner, CEO of Wacker Neuson SE. “Strong demand for our products confirms that we are in tune with our customers’ needs and that our services resonate strongly with the market.”
While the Group exceeded its revenue guidance, it was unable to achieve its profitability goals. Profit before interest and tax (EBIT) decreased 5.7% to €153.1 million, compared with €162.3 million in 2018.
Restructuring measures at the North American plant in Menomonee Falls also had a dampening effect here. In addition, inventory streamlining resulted in extensive volumes of equipment in North America and Scandinavia being sold off. This squeezed profit levels further. In light of weaker profitability, the Executive Board has agreed on a program aimed at reducing costs and improving efficiency. This is expected to yield potential savings of around €50 million relative to fiscal 2019, which should be achieved gradually over the course of 2020 and 2021.
“We are not satisfied with the development of our profit figures. The program that has now been approved will help improve Group profitability sustainably and enable us to achieve the goals set out in our Strategy 2022,” added Wilfried Trepels, CFO of Wacker Neuson SE.
Once again, Europe remained the most important target region in 2019, accounting for 72.5% of revenue, compared with 73% in 2018. The majority of European countries contributed to this growth.
Revenue for the Americas rose 14.5% to €459.5 million. Adjusted for currency effects, revenue increased by 9.1%. Group business was bolstered here in particular by strong demand for worksite technology products. As a result of improved market penetration, sales of skid steer loaders manufactured in the US also increased along with sales of other compact equipment including excavators, dumpers and telescopic handlers.
In Asia-Pacific, revenue rose 4.7% to €62.6 million. As in the previous year, China and Australia were the Group’s largest markets in this region.
Order intake at the start of 2020 was below the strong baseline from the previous year. Significant uncertainties exist with respect to the continued spread of the coronavirus and the related effects on customer demand as well as the supply chains of the Group. The Executive Board assumes that the production numbers initially planned for the year 2020 can partially not be met due to bottlenecks in the supply chains. Furthermore, a severe weakening of individual markets can be expected.