Wacker Neuson growth offset by supply issues

Buoyed by rental and construction demand in the Asia Pacific, Europe and the Americas, German compact equipment manufacturer Wacker Neuson Group has reported revenues of €928.3 million for the first six months of 2021, up 16.5% on €796.7 million last year.

Wacker Neuson is working on its production flexibility in the face of supply chain delays.

Overall earnings for the half were up dramatically, with EBIT of €100.1 million, up 98.6% or almost double compared to €50.4 million for the previous corrsponding half.

However supply chain delays, driven by the surge in demand from stimulus measures to counter the Covid-19 crisis, are the group’s “biggest challenge for the foreseeable future.”

Despite order intake accelerating in the first half, disruptions to global supply chains have resulted in still ongoing fulfilment delays.

Highlights in Wacker Neuson’s half year result include Asia-Pacific revenue up 49.8% to €32.8 million compared to €21.9 million last year.

Australia “developed exceptionally positively” buoyed by an extended dealer network and increased focus on independent rental companies.

Business also strengthened in Europe, which accounts for 79% of group figures, with revenue for the first half-year of €737.1 million, up 16.7% on the previous period (€631.4).

Germany, Austria and the UK showed marked construction sector growth, driven by the Group’s dumper releases, as well as rising demand for compact agricultural equipment, which saw revenue reach €174.7 million, up 13.9% on the same period last year (€153.4 million).

In the Americas, revenue was up 10.5% to €158.4 million compared to €143.4 million in the same half last year, aided by growing confidence and demand from rental companies towards the end of the first quarter.

Wacker Neuson Group CEO Karl Tragl, said, “Demand for our products is developing dynamically but recent weeks have seen our supply chains severely overstretched, and in some cases, interrupted.”

Wacker Neuson headquarters, Munich, Germany.

While net working capital ratio for the first half came in at 26.7% due to a demand-driven drop in inventory in finished machines, levels of unfinished machines more than doubled as a result of supply chain delays.

Tragl said global supply would remain the group’s “biggest challenge for the foreseeable future.”

“We need to maximise production flexibility so we miss as few manufacturing windows as possible, but are increasingly reaching the limits of what is feasible here.”

The first half also saw the completion of the company’s executive board, with Tragl having taken on the role of Chief Executive Officer (CEO) and Chairman of the Executive Board on 1 June, along with Christoph Burkhard as Chief Financial Officer (CFO).

Felix Bietenbeck is Chief Operations Officer (COO) and Chief Technology Officer (CTO) and Alexander Greschner is Chief Sales Officer (CSO).

Looking ahead, the Board has confirmed revenue and earnings guidance for 2021 as between €1,750 and €1,800 million.