German company Wacker Neuson has reported growth in all regions and business segments in its third quarter 2018 financial results.
In Europe, the largest sales market for the group, third quarter revenue increased by 10% to €307 million, compared to €280 million in the third quarter of 2017. The region’s share of group revenue remained unchanged at 74%.
Accounting for 23% of group revenue, the Americas enjoyed an 11% rise in revenue in the third quarter to €98 million, compared to €88 million in the corresponding period of 2017. Martin Lehner, CEO of Wacker Neuson, said, “We benefited in particular from continued strong demand from the North American rental industry.”
However, South America saw a drop in revenue, attributed to political uncertainties.
In the Asia Pacific region, third quarter revenue was up 10% to €11 million, compared to €10 million in the same period in 2017. This corresponded to a 15% rise when adjusted for currency effects.
Total revenue across the group was reported to be 10% higher, at €416 million, than in the third quarter of the previous year, when it was €379 million. However, bottlenecks in the global supply chain continued to have dampening effect, according to Wacker Neuson.
Looking at revenue for the first nine months of 2018, it rose by 9% – or 11% when adjusted for currency effects.
However, profitability was slightly below prior-year levels. While EBIT (earnings before interest and taxes) came to €41 million, compared to €40 million in the third quarter of 2017, the EBIT margin, at 9.9%, dropped by 0.7 percentage points relative to the previous year, when it was 10.6%.
This was attributed to higher material prices and bottlenecks in the global supply chain.
As part of its efforts to optimise production capacities and logistics processes, the group wound down operations and closed its factories in Norton Shores, US, and Manila, Philippines, which further impacted productivity. In future, the products previously manufactured at these sites will be produced at the existing factories in Menomonee Falls, USA, and Pinghu, China, according to Wacker Neuson.
With regard to the first nine months of 2018, EBIT amounted to €119 million, representing a rise of 18% on the first nine months of 2017, when it was €101 million. The EBIT margin for the period improved 0.8 percentage points to 9.6%.
In light of these positive developments, and despite issues with the supply chain that continue to be a source of uncertainty, Wacker Neuson has confirmed its full-year 2018 guidance.
The company expects revenue to increase by between 8 and 11% to reach between €1.65 billion and €1.7 billion – an improvement on the 2017 figure of €1.53 billion – and the EBIT margin corridor has been set at 9 to 10%.
Lehner said, “We are continually optimising our internal structures and processes in response to rises in material prices, personnel costs and transport expenses. The positive market situation is also allowing us to adjust our sales prices, although the impact of these adjustments will not be immediately evident.”