wacker neuson group€¦ · target group oriented sales: light equipment 27% compact equipment 53%...

Wacker Neuson Group

July 2019

Agenda

2Wacker Neuson SE, July 2019

Overview 01

Financials Q1/19 02

Outlook 03

Product range to meet the full spectrum of customer needs

3

Light Equipment Compact Equipment

1 FY 2018.2 In selected countries.

Concrete technology Compaction

Demolition Power & Lighting Pumps

Heating

Excavators

Dumpers

Telehandlers Wheel loaders

Skid SteersBackhoe-loaders

AcademyUsed machines2

Repair2 &

Maintenance2

Financing

Rental service2

E-Store2

Genuine parts

Telematics

Services

53% of sales127% of sales1 20% of sales1

Wacker Neuson SE, July 2019

Concrete solutions

Target industries besides construction

4

Markets Light equipment Compact equipment

Agriculture

Renovation/rehabilitation

Development

Infrastructure (road and highway

construction, bridge construction)

Gardening and landscaping

Handling logistics/port logistics

Residential construction

Demolition

Maintenance/repairs

Industry & Recycling

Underground construction

Oil & gas/energy industry

Events

Municipalities

Target group oriented sales:

Light equipment 27%

Compact equipment 53%

Services 20%

Revenue split (FY 2018, as %)

Business segmentsMost industries demand both light an compact equipment


Our brands and target groups

5

Construction, gardening/landscaping, energy sector etc. Agriculture, horse breeders, tree nurseries etc.


Global footprint

6

Sales by region Core markets: EMENA & NAM, further internationalization ongoing

Europe 73% Americas 23% Asia-Pacific 4%

Revenue split (FY 2018)


5 year comparison

7

Revenue and EBIT margin 2014-2018


1,2841,375 1,361

1,534

1,707

10.2%

7.4%6.5%

8.6%9.4%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0

500

1,000

1,500

2,000

2014 2015 2016 2017 2018

CAGR +7.4%[€ m]

Agenda


Overview 01

Financials Q1/19 02

Outlook 03

Key figures

91 Net working capital/annualized revenue for the quarter.

2 Days inventory outstanding: (inventory/annualized cost of sales for the quarter)*365.

NWC ratio1: 45.8%

(+6.5PP yoy)

DIO2: 179 days

(+26 days yoy)

Equity ratio: 57.7%

(-7.8PP yoy)

March 31, 2019

Revenue yoy

+17%

EBIT yoy

+31%

Op. CF

€ -116m

FCF

€ -143m

(margin: 6.9%)

Q1/19

(€ 435m)

(Q1/18: € -45m)(Q1/18: € -41m)


339

425379 392

371

455416

466435

4.2%

11.0% 10.6%

7.8%6.2%

12.3%

10.1%

8.4%6.9%

0%

5%

10%

15%

20%

0

100

200

300

400

500

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Revenue and earnings

10

+17%

Q1/19: Accelerated revenue growth continues from Q4/18

Income statement (excerpt)

Q1/19: Comments

Revenue +17.3% yoy (adj. for FX effects: +15.6%)

▪ Double-digit growth in all reporting regions

▪ Compact equipment for the agricultural sector grew at a significantly

higher-than-average rate (+42% yoy)

Gross profit +15.3% yoy (gross profit margin -0.5PP)

▪ Restructuring at the plant in Wisconsin, USA, continued as planned

▪ Increased costs in production and logistics caused by changes in the

product mix, additional shifts required to manage increased production

volumes and handle unfinished machines

EBIT +31.3% yoy (EBIT margin: +0.7PP)

▪ Operating costs increased at a disproportionately low rate despite a

moderate increase in headcount, wage increases and costs for Bauma

trade show

▪ Operating costs as a share of revenue fell by 1.2PP on the prior year

Earnings per share +42.9% yoy

▪ The financial result was EUR 2.1m up on the previous year: Positive FX

effects (EUR +2.9m yoy) in particular due to the appreciation of

currencies in several emerging economies; interest income slightly below

prior year (EUR -0.8m yoy), mostly due to the initial application of IFRS 16

▪ The tax rate increased slightly to 30.4% (Q1/18: 29.1%)

Revenue

[€ m]

EBIT

margin

€ million Q1/19 Q1/18 Δ

Revenue 434.6 370.5 17.3%

Gross profit 110.9 96.2 15.3%

as a % of revenue 25.5% 26.0% -0.5PP

SG&A incl. other income/expenses -80.7 -73.2 10.2%

as a % of revenue -18.6% -19.8% 1.2PP

EBIT 30.2 23.0 31.3%

as a % of revenue 6.9% 6.2% 0.7PP

Profit for the period 20.8 14.6 42.5%

EPS (in €) 0.30 0.21 42.9%


Q1/19: Compact equipment driving growth

434.6

13.4

104.5

316.7

Total Q1/19

Asia-Pacific

Americas

Europe

Business development by region and business segment

11

Q1/19: Double-digit growth in all regions

Revenue Europe +18.3% yoy (adj. for FX effects: +18.4%)

▪ Strong demand for compact and light equipment in all regions

▪ Rapid growth in the UK (significant gains with dumpers and excavators),

above-average growth in France, Poland and Austria with increased

market shares

▪ Revenue generated with Weidemann- and Kramer-brand compact

equipment for the agricultural sector +42% yoy

Revenue Americas +14.0% yoy (adj. for FX effects: +6.7%)

▪ Worksite technology (especially generators and light towers) and compact

equipment were key growth drivers

▪ Growth dampened by pre-buy effects in Q4/18 related to changes in

emissions legislation in Canada

▪ Positive developments in South America, uncertainties remain

▪ Earnings bolstered by improved currency situation,

restructuring in the US continued as planned

Revenue Asia-Pacific +21.8% yoy (adj. for FX effects: +20.9%)

▪ Production in China ramped up on schedule, positive development with

light equipment and excavators

▪ First mini and compact excavators delivered to John Deere

73%

24%

3%

100%

+18%

+14%

+22%

+17%

share yoy

46.1

2.5

-1.7

30.2

EBIT1

Q1/19: Comments

Revenue [€ m]

434.6

82.3

245.8

109.8

Total Q1/19

Services

Compact equipment

Light equipment 25%

56%

19%

100%

+6%

+25%

+12%

+17%

share yoy

1 EBIT for regions before consolidation.2 Revenue by business segment before cash discounts.

Revenue [€ m]2


Rise in inventories and receivables drive up net working capital

12

Inventories

Trade payables

Trade receivables

▪ Seasonal rise in inventories, further increase in pre-buy engines

▪ Rise in trade receivables due to the increased volume of business and

expansion of the dealer network in North America

▪ Rise in trade payables due to the increased volume of business and an

increase in inventory compared with the prior-year quarter.

→ Significant, temporary rise in net working capital (see the following

slide)

1 Days inventory outstanding = (inventories/(cost of sales*4))*365 days; 2 Days sales outstanding =

(receivables/(revenue*4))*365 days; 3 Days payables outstanding = (payables/(cost of sales*4))*365 days.

Comment

Trade payables [€ m]

Inventories

[€ m]

462428 439 434 459 462

500553

633

171

129150 141 153

130151 144

179

0

100

200

300

400

0

100

200

300

400

500

600

700

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

DIO1

[days]

241272

249 235273

320 304 303

371

65 58 60 5567 64 67

59

78

0

50

100

150

200

0

100

200

300

400

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

113 114 120134

149163 167

213 208

42 34 41 43 50 46 50 56 59

0

100

200

300

400

0

100

200

300

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Trade receivables [€ m]

DPO3

[days]

DSO2

[days]


13

Net working capital

Free cash flow

Cash flow from operating activities

▪ Increase in net working capital due to a temporary rise in inventory and

increased trade receivables (see previous slide)

▪ Financing programs used to establish a network of anchor dealers in

North America (rise in other assets)

▪ Increased investments in growth

▪ Major yet temporary impact on free cash flow, normalization of

inventory levels and reduction in trade receivables expected over the

coming months

-19

3361 63

-41

610 8

-116-150

-100

-50

0

50

100

150

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Comment

-26

2851 46

-45

57

-3

-12

-143-160

-120

-80

-40

0

40

80

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Free cash flow

[€ m]

Cash flow from operating activities

[€ m]Net working capital

[€ m]

590 586 568 536583

620 638 644

797

44%

34% 38% 34%39%

34%38%

35%

46%

0%

20%

40%

60%

80%

100%

0

200

400

600

800

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Net working capital

[as a % of sales]

Cash flow impacted by a rise in net working capital


1,102 1,083 1,103 1,115 1,122 1,170 1,200 1,221 1,241

67% 65% 67% 69%65% 65% 65% 64%

58%

0%

20%

40%

60%

80%

100%

0

200

400

600

800

1,000

1,200

1,400

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

237 245

195

148

193 188 193 205

358

22% 23%18%

13%17% 16% 16% 17%

29%

0%

10%

20%

30%

40%

50%

60%

70%

0

100

200

300

400

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Increased gearing in balance sheet

14

▪ Temporary reduction in equity ratio due to increased debt and a

structural reduction of around 2PP due to the first-time application of

IFRS 16

▪ Marked rise in net financial debt, gearing1 increased to 29%

▪ May 2019: Promissory note (Schuldschein) successfully issued with

attractive interest rates and terms of five and seven years to secure

long-term funding for the Group’s accelerated growth

1.9

0.90.8

0.7

1.2

0.60.8 0.8

1.6

0.0

0.5

1.0

1.5

2.0

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Net financial debt

[€ m]

Equity

[€ m]

Net financial debt and gearing1

Equity and equity ratio

Net financial debt/EBITDA2

1 Net financial debt/equity. 2 Net financial debt/annualized EBITDA for the quarter.

Gearing1

Equity ratio

Net financial debt/

EBITDA2 [x]

Comment


50

75

100

125

Wacker Neuson SDAX DAX Peergroup

Share Development

15

The share in 2018/191

Key figures per share

Dividend payout

1 As at June 17, 2019 2 Peergroup: Ashtead, Atlas Copco, Bauer, Caterpillar, Cramo, Deutz, DoosanBobcat, Haulotte,

Husqvarna, John Deere, Komatsu, Manitou, Palfinger, Ramirent, Terex, United Rentals, Volvo. 3 As at June 19, 2019.

1.30

0.940.81

1.25

2.06

0.50 0.50 0.500.60

38%53%

62%48% 53%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

0.00

0.50

1.00

1.50

2.00

2.50

2014 2015 2016 2017 2018

EPS in € Dividend per share in € payout ratio

Family 58%

Free float 42%

in € Q1/19 Q1/18

Earnings per share 0.30 0.21

Book value per share 17.69 16.00

Share price end of period 21.20 28.14

Market capitalization (€ m) 1,487.0 1,973.7(Total shares: 70,140,000)

Coverage3 Shareholder structure

Bank TP (€) Recom. Date

Hauck & Aufhäuser 36.50 Buy June 14, 2019

Warburg 28.80 Buy June 17, 2019

MainFirst 28.00 Outperform June 11, 2019

Metzler 27.00 Buy May 16, 2019

Berenberg 27.00 Buy Jan 20, 2019

Commerzbank 25.80 Hold June 19, 2019

Bankhaus Lampe 23.00 Buy May 07, 2019

Kepler Cheuvreux 22.00 Hold May 08, 2019

Pareto 21.30 Hold May 07, 2019

0.60

Special

dividend

0.50

% -45%

2

+34%

1.10


Agenda


Overview 01

Financials Q1/19 02

Outlook 03

17

▪ Development of anchor dealers for compact and light equipment

▪ Pro-active relationship management with key account rental

customers and construction companies

▪ Focus on diversification of sales channels and industries

▪ Light equipment established in new retail channels

▪ North American market for skid steers accounts for ~70% of world market

▪ Essential product to be attractive for dealers and rental companies

▪ Large potential for further compact equipment sales

81,00089,000 91,000

0

25,000

50,000

75,000

100,000

2016 2017 2020e

Skid Steer market North America1

2016 – 2020e (units)

Roadshow Truck, Franklin Equipment.


Relocation of skid steer production to the US pays off

Skid steer as key product for North American market Development of anchor dealers in North America

1 Source: CECE, Off-Highway, 2018.

52,100

65,00072,000

0

20,000

40,000

60,000

80,000

2018 2019e 2023e

18

New plant located in Pinghu, 30 km from Shanghai city border.

▪ Mini and compact excavators for Asia-Pacific, production of the first model

(1.7 tons) started in Q1/18, production of larger models (5-7 tons) started in

Q4/18

▪ OEM cooperation with John Deere helps to improve capacity utilization

(cooperation covers machines in the range of 1.7 to 7.5 tons)

▪ Building on local/regional presence Demand for repair and maintenance

of infrastructure is growing, especially in megacities


Setting the base for further growth in Asia

Successful start of production in Pinghu (China))

Mini excavator market China 2018 – 2023e (units)1

Excavator: EZ17.

1 Source: Off-Highway, April 2019.

Strategic alliances and partnerships leverage our sales

191 Not in Japan, phasing out. 2 Commonwealth of Independent States. 3 Kramer “green line” only. 4 WN = Wacker Neuson.

Wacker Neuson produces

for Caterpillar1

Kramer3 distributes

via JD‘s dealer network

Weidemann distributes

via ISEKI‘s network

Wacker Neuson distributes

via MHE‘s network

HAMM produces

for Wacker Neuson

OEM (Latin America) Sales (Japan) Sales (ASEAN)

Core Markets

Further partnerships in Latin America & Asia


Randon produces for Wacker Neuson

OEM (global)OEM (global1) Sales (EMENA & CIS2) OEM (APAC) OEM (Europe)


for John Deere


for Würth

Strategic alliance with John Deere in EMENA and CIS1

201 Commonwealth of Independent States. 2 Revenues of FY 2017 in € bn, agricultural sectors only.

3 FY ending October 31. 4 FY ending September 30. Source: Annual reports. Wacker Neuson SE, July 2019

John Deere: Market leader within agricultural machinery2

9 small and compact wheel loaders 9 telehandlers4 tele wheel

loaders

Start in EMENA & CIS1 (Region 2)

1.3

3.8

7.4

9.9

11.3

17.9

SAME Deutz-Fahr

Claas

AGCO

CNH Industrial

Kubota

John Deere

4

3

[€ bn]

Outlook for 2019

21

Revenue and earnings guidance for 2019 confirmed

Business index for construction industry Business index for agricultural industry

▪ CECE business index at a high level, expectations in the agricultural sector

have cooled according to CEMA

▪ IMF lowered its economic outlook once again in April, macroeconomic

uncertainties remain in place

▪ Situation in the supply chain has improved compared with 2018; however,

the risk of delayed deliveries remains

▪ Revenue and earnings guidance for 2019 confirmed, with revenue

expected in the upper half of the projected range

▪ Net working capital expressed as a percentage of revenue is expected to

be slightly lower than the prior-year level

Source: CECE, May 2019 Source: CEMA, May 2019

2012 2013 2014 2015 2016 2017 2018 2019

1,707

9.4%

8%

9%

10%

11%

12%

0

500

1,000

1,500

2,000

2018 Guidance 2019

1,775-1,850

9.5-10.2%

+4-8%Revenue

[€ m]

EBIT

margin

Comments


Agenda


Appendix

23

“Strategy 2022” and mid-term targets

“Strategy 2022” Mid-term targets 2022


24

Source: Off-Highway Research, April 2019.

▪ Worldwide construction equipment market to remain on a very high

level

▪ Strategy 2022 focuses on market share gains, especially with

compact equipment

Tailwind from global markets

Construction industry: 2019–2023 machinery sales Development of agricultural sector in Germany


Europe India Japan North America RestChina

Milk price development in Germany

Source: ife Institut für Ernährungswirtschaft, Kiel, March 2019.

Source: German Farmer’s association, March 2019.

Price [Cent / kg milk]

[Units]

Fragmented market

Dominated by niche/specialized manufacturers

Not targeted by heavy equipment manufacturers

Quality rather than price

Significant barriers to market entry

Light equipment/

construction

Market structures and dynamics

Fragmented market with local manufacturersCompact equipment/

agriculture

Global competitors

Similar target groups to light equipment for the construction

industry

Specialized manufacturers

Compact and heavy equipment providers

Compact equipment/

construction

Ammann

Bomag

Husqvarna

Multiquip/Mikasa

Weber MT

Competitors

JCB

Manitou

Schaeffer

Thaler

Compact equipment

Atlas Weyhausen

Bobcat (Doosan)

Kubota

Manitou

Takeuchi

Yanmar

Heavy equipment

Caterpillar

Hitachi

JCB

Komatsu

Liebherr

Volvo

25

Competitive landscape for Wacker Neuson Group



Challenges: New emission regulations for diesel engines

Engine emissions regulations – lack of harmonization driving costs and consuming resources

27

Continuous expansion of zero emission portfolio


EZ17e

DW15e

DT10e

AP1840e AP2560e

AS60e

AP1850e

ACBe

Financial Calendar and Contact

28

July 1, 2019 Roadshow Paris

August 6, 2019 Publication of half-year report 2019; analysts’ & investors’ conference call

August 28, 2019 Commerzbank Sector Conference, Frankfurt

September 24, 2019 Berenberg/Goldman Sachs German Corporate Conference, Munich

November 7, 2019 Publication of Q3 report 2019; analysts’ & investors’ conference call

Contact

Wacker Neuson SE

IR Contact: +49 - (0)89 - 354 02 - 427

[email protected]

www.wackerneusongroup.com

Disclaimer

Cautionary note regarding forward-looking statements

The information contained in this document has not been independently verified and no representation or warranty expressed or implied is made as to, and no reliance should be placed on, the

fairness, accuracy, completeness or correctness of this information or opinions contained herein.

Certain statements contained in this document may be statements of future expectations and other forward looking statements that are based on management‘s current view and assumptions and

involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements.

None of Wacker Neuson SE or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this

document or its content or otherwise arising in connection with this document.

This document does not constitute an offer or invitation to purchase or subscribe for any securities and neither it nor any part of it shall form the basis of or be relied upon in connection with any

contract or commitment whatsoever.


wacker neuson group€¦ · target group oriented sales: light equipment 27% compact equipment 53%...

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