Fueled in large part by robust U.S. sales in skid-steer loaders, the Wacker Neuson Group is reporting record high revenues for the first quarter of 2018 compared to a year ago, with an increase of more than 9 percent to $440.1 million.
That’s up from $402.2 million in revenues reported in the first quarter of 2017.
All regions and business segments reported a rise in revenue, the company says in a press release from Munich.
“In the U.S., we benefited from a number of trends, including increased investments from rental chains stocking up on worksite technology such as generators and heaters,” explains Martin Lehner, CEO of Wacker Neuson SE.
“Our performance was also bolstered by strong sales of our U.S.-produced skid steer loaders.”
And earlier this year, Wacker Neuson upped its skid steer warranties to three years, 3000 hours, calling it “the most comprehensive warranty in the industry.”
Rising demand in European and North American construction markets drove the growth and provided a strong beginning for 2018, the company says. So did strong performances from the Weidemann and Kramer brands in the agricultural sector.
Revenue increased at an even faster pace of 14 percent relative to the previous year, taking into account adjustments for currency effects.
Negative currency developments, in particular the U.S. dollar’s weak performance against the euro, resulted in translation effects that impacted revenue in the amount of -$19 million, the company says.
“The current strained situation among some suppliers is proving a challenge for manufacturers of construction and agricultural equipment, with bottlenecks among suppliers delaying deliveries to customers,” Wacker Neuson says in its press release.
Europe is the largest market for the group, accounting for 72 percent of its business. Revenue for this region rose 8 percent.
But revenue for the Americas grew at an even faster pace than in Europe, increasing 13 percent to $109.2 million. That’s up from $96.1 million in the first quarter of 2017.
A 29% revenue jump in the Americas
Adjusted for currency effects, this corresponds to a 29-percent jump, the company says.
Revenue for the Asia-Pacific region rose 16 percent to $13 million, compared to $11.9 for the same period a year earlier. Adjusted for currency effects, this corresponds to a rise of 26 percent.
Growth was particularly strong in China, where the Wacker Neuson Group started series production of compact excavators in January 2018.
Profit before interest and tax (EBIT) grew markedly by 61 percent to $27.3 million in the first quarter, compared to $16.6 million for 1Q17).
This corresponds to an EBIT margin of 6.2 percent. The revenue hike and an improved cost structure boosted earnings.
“However, profit was also dampened by a more unfavorable regional and product mix and production delays,” the company says.
Price adjustments for light and compact equipment
Increased raw material prices, higher personnel and transport costs as well as new environmental, health and safety regulations for equipment have driven up costs, the Wacker Neuson Group reports.
The company remains committed providing its renowned product and service quality at fair prices. To maintain its capabilities here, the group will be increasing sales prices across all product segments and brands as of July 1, 2018.
“Thanks to its ongoing measures to streamline internal processes, the group is only passing on part of the increase in costs to its customers,” Wacker Neuson says.
Financing secured for “Strategy 2022”
At the end of March 2018, Wacker Neuson secured its financing for the medium term.
“We successfully placed a promissory note in the amount of $100 million and agreed on medium-term credit lines totaling $89 million with three banks,” says explains Wilfried Trepels, CFO. “This provides us with the funds we need to finance our growth strategy.”
Guidance for 2018 moves ahead
“In April, we presented a host of new products and innovations to our customers and business partners at Intermat in Paris, which is this year’s largest construction industry trade show. The mood across the industry is very positive,” says Martin Lehner.
Generating high interest were Wacker Neuson’s new electric excavators and vibratory plates, which round off the company’s fully electric offering for urban construction sites.
The zero emissions ‘E’ lineup from Wacker Neuson, which the company showcased at the Bauma show in 2016, currently comprises two battery-powered rammers, a dual power excavator, two electric wheel loaders in development, an electric track dumper and a battery-powered vibratory plate that’s already available.
Wacker Neuson also unveiled its truck-like, dual-view dumper with rotating console.
With its zero emission line, Wacker Neuson says it is the first manufacturer worldwide to deliver an end-to-end product portfolio that supports the entire construction workflow on smaller sites without releasing any emissions, “while also keeping noise levels to an absolute minimum.”
To view the company’s latest quarterly report, click here.