The Wacker Neuson Group is reporting strong growth in revenue for 2022, despite what it describes as an ‘adverse environment’. Group revenue climbed a healthy 20.7% to €2.2524 billion, compared with €1.8662 billion for 2021.
This was despite the outbreak of the war in Ukraine and the resulting increase in pressure on the economic environment over the course of the year.
"Against the backdrop of generally difficult conditions, we can be very satisfied with our business performance in 2022," explained Dr Karl Tragl, chairman of the executive board and CEO of the Wacker Neuson Group. "A significant rise in inflation, driven by rising material prices, increasing personnel costs and rising energy costs, combined with ongoing problems in supply chains and the imponderables surrounding the Ukraine war have placed numerous obstacles in the way of our day-to-day business, which we have successfully overcome. Important strategic projects, such as the integration of the Enar Group, the significant expansion of our production capacities and a new factory construction in Serbia, were consistently driven forward by us in 2022 and secure the future viability and success of our Group."
The firm’s EBIT rose disproportionately due to higher procurement costs by 4.6% to €201.8 million, while the EBIT margin of 9% was in line with expectations. Net working capital ratio rose to 31.9% against the backdrop of supply chain issues and the firm says that there is significant growth expected for 2023, along with an increase in the EBIT margin. The reason for the disproportionately low increase in earnings was mainly due to higher procurement costs.
Revenue in the Europe (EMEA) region increased to €1.7099 billion, representing growth of 15.7%, compared with €1.4775 billion for 2021. Revenues were once again at a record level. In addition to the home market of Germany, the main revenue drivers included the major construction machinery markets of France and the UK.
However, the Eastern European countries and most of the Northern European countries also recorded double-digit growth. The markets of Southern Europe did not perform as strongly on average, but still showed a pleasing overall trend, having grown disproportionately in the previous year in the aftermath of the first waves of the pandemic.
In the Americas region, revenue in 2022 increased particularly significantly by 39.7% to €459.1 million, compared with €328.6 million for 2021, almost returning to their pre-COVID 19 pandemic level of around €460 million. Demand in the North American market developed positively across all sales channels, driven by high end-customer demand for new equipment and rental machines. As part of the diversification of the sales strategy, Wacker Neuson was able to attract additional authorised dealers in North America in 2022. Once again, business in Canada developed particularly well.
The Asia-Pacific region also developed dynamically, contributing a total of €83.4 million to Group revenue with growth of 38.8%, compared with €60.1 million for 2021. As in the previous year, growth in the region was largely driven by business development in Australia.
Profitability slightly weakened due to higher procurement costs. The company adjusted selling prices several times in the past fiscal year and introduced flexible pricing models. However, the resulting increases in selling prices only partially offset the rise in production costs. In addition, the price protection of older orders from the order backlog reduced profitability.
Following the significant reduction in previous years, the net working capital ratio increased to 31.9%, exceeding the strategic target of up to 30%. In absolute terms, net working capital amounted to €718.9 million, 44.5% higher than in the previous year. This development is mainly due to increased inventory levels as a result of ongoing supply chain issues, which were further exacerbated by the Ukraine war. In the second half of 2022, the company began implementing measures to reduce inventory levels.
"We have started the new fiscal year with a continued high order backlog and good demand. Against the backdrop of ongoing supply chain issues, ensuring our ability to deliver to our customers remains a key objective in 2023," clarifies Christoph Burkhard, CFO of the Wacker Neuson Group. "At the same time, effective working capital management is a main topic on our agenda in light of the numerous macroeconomic challenges."
The executive board anticipates revenue of between €2.3 billion and €2.5 billion in fiscal 2023, corresponding to growth rates of 2-11% compared with fiscal 2022. EBIT margin is expected to be in the range of 9.5-10.5%. This includes an exceptional earnings effect in the lower double-digit million euro range from the sale of non-current assets no longer required for operations, which was completed in January 2023 and, according to original planning, was formerly expected to be completed in 2022.
