Although first-quarter sales and profit declined in the first quarter of fiscal 2009 because of the economic crisis and a harsh winter, Wacker Neuson maintained a high equity ratio, positive cash flow and low net financial debt of 7 percent, the company said last week.
First quarter revenue declined 39.9 percent year over year from €228.3 million in the first quarter of 2008 to €137.3 million (about U.S. $185.8 million). EBITDA dropped from €29.4 million to minus €12.3 million. Quarterly profit dropped from €12.3 million for the first quarter of 2008 to a €16.6 million loss, partly attributable to a one-off expense of about €5 million for restructuring charges.
“An improvement in the weather saw business pick up in Europe during March,” said Dr. Georg Sick, CEO of Wacker Neuson. “We have increased our cost-cutting measures without compromising the core competencies or performance levels of the company.”
Cost cuts include lowering the investment budget by 40 percent compared with last year, postponing projects and reducing work hours and personnel costs by 20 percent relative to the end of 2008. To achieve this, the company is mainly focusing on expanding its flextime framework and implementing short-time work at individual production sites in Germany and Austria, together with staff rationalization in unavoidable cases. The company has also reduced inventory to cut back on working capital.
“We have been able to maintain our stable financial position with a high equity ratio of 77.3 percent, positive operative cash flow and a consistently low net financial debt,” added Sick.
Sick cautioned that he did not expect a quick turnaround to the overall economic situation. “Despite experiencing a slight improvement in March, we are still extremely cautious about further trends in 2009 and expect the global construction industry to continue its downward spiral until well into 2010,” he said. “Order intake has dropped and it is unclear how order patterns will develop in the coming months, thus making it impossible for us to accurately forecast sales and earnings in fiscal 2009. However, we still expect reduced sales and earnings for the current fiscal year and, based on our current position, cannot rule out losses for the first six months of the year.”
Wacker Neuson is based in Munich, Germany, with U.S. headquarters in Menomonee Falls, Wis.