First Nine Months Strong for Wacker Despite Slowdown

Nov. 14, 2008
Fueled by the merger of Wacker and Neuson, Wacker Construction Equipment, soon to be known as Wacker Neuson SE, grew sales 35.8 percent during the first nine months of 2008, from €504.2 million in the first nine months of 2007 to €684.7 million this year (about U.S. $853.3 million). EBITDA rose 9.8 percent from €83.2 million last year to €91.4 million (about U.S. $113.9 million).

Fueled by the merger of Wacker and Neuson, Wacker Construction Equipment, soon to be known as Wacker Neuson SE, grew sales 35.8 percent during the first nine months of 2008, from €504.2 million in the first nine months of 2007 to €684.7 million this year (about U.S. $853.3 million). EBITDA rose 9.8 percent from €83.2 million last year to €91.4 million (about U.S. $113.9 million).

Still, the company acknowledged being hit by the effects of the worldwide economic slump. “During the third quarter, the rapid escalation of the current downturn into a global economic crisis further dampened demand for light equipment and, as expected, for compact equipment,” said Dr. Georg Sick, CEO. “Even in these times of crisis, we have the benefit of a strong and stable financial position, coupled with an equity ratio of 74.4 percent.”

The company’s rental strategy in Central and Eastern Europe was effective. “Rental revenue in Central and Eastern Europe was up 2.1 percent on last year’s figure, confirming our strategy to stock our rental fleets with products from our own manufacturing facilities,” added Sick.

Despite the depressed market, various regions and lines of business performed well in the third quarter. Stable demand from the agricultural industry enabled Weidemann GmbH to increase sales by 25.9 percent to €80.7 million. Asian, South African, South American and Eastern European markets also reported positive trends, although this was not sufficient enough to compensate for the downward tendency in the core regions of the United States and Western Europe.

To counteract adverse market developments, the company is optimizing cost structures. “Over the past few weeks, we stepped up activities in this area and introduced numerous cost-efficiency measures across all areas of the company in order to secure our long-term financial position and earnings power,” said Sick. The measures include a recruitment freeze, reassessment of current projects and scheduled investments, reduction of inventory, and cancellation of numerous benefits and activities within the company, along with cutbacks in manufacturing, including the closing of a production facility in Tredegar, Wales.

Wacker expects the construction industry downturn to continue through the rest of 2008 and into 2009, especially in the United States and Western Europe, along with increased competition on the market. Based on this assumption, Wacker revised its forecast at the end of July is now targeting sales of at least €870 million and an EBITDA margin of at least 11 percent.