Wacker Neuson SE — Earnings Release 2008

Nov 11, 2008

News Details

Corporate | 11 November 2008 07:47

Wacker Construction Equipment AG: Wacker Construction Equipment AG grows on the back of merger, showing strong and stable financial position

Wacker Construction Equipment AG / Quarter Results

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Wacker Construction Equipment AG grows on the back of merger, showing
strong and stable financial position
• Sales and EBITDA up following merger
• Services segment performs well
• Cost-cutting measures defined and being implemented
• High equity ratio and low level of debt
• Group remains on growth path

(Munich, November 11, 2008) Fuelled by the merger, Wacker Construction
Equipment AG (the future Wacker Neuson SE) grew its business over the first
nine months of fiscal 2008 despite the increasingly challenging market
climate. Sales were up 35.8 percent from EUR 504.2 million to EUR 684.7
million. Profit before interest, tax, depreciation and amortization
(EBITDA) rose 9.8 percent from EUR 83.2 to EUR 91.4 million. Overall, the
Group is in a strong and stable financial position and continues to pursue
its long-term growth strategy.

Rise in rental revenue in Central and Eastern Europe confirms strategy
'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. Despite this, we stayed on the
right path – taking the next key steps in our growth strategy,' explains
Dr.-Ing. Georg Sick, CEO of the future Wacker Neuson SE. '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,' continues Sick. The Group also continued
with the global launch of compact equipment via the existing sales and
service network. Sourcing compact inventory for demo and rental fleets from
Group-internal manufacturing facilities has an initial dampening effect on
sales and earnings. However, it accelerates market introduction and
bolsters the profitable rental business long term. '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,' emphasizes Sick. In
addition, the Group managed to reduce SG&A and R&D expenses as a percentage
of sales, now down to 25.9 percent compared with 29.3 percent last year.

Global economic crises puts a dent in the construction industry
Despite the depressed market climate, various regions and lines of business
performed well in the third quarter. Stable demand from the agricultural
industry meant that Weidemann GmbH was able to increase sales by 25.9
percent to EUR 80.7 million. Asian, South African, South American and
Eastern European markets also reported positive trends, although this was
not sufficient to compensate for the downward tendency in core regions (US
and Western Europe). In order to counteract adverse market developments as
effectively as possible, the company continues to optimize its 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,' continues Sick. These activities include a recruitment freeze,
reassessment of current projects and scheduled investments, reduction of
inventory, and cancellation of numerous benefits and activities within the
company. These are flanked by cut-backs in the manufacturing facilities,
where the company cannot rule out measures such as part-time work or
headcount rationalization. At a Supervisory Board meeting on November 6,
the Executive and Supervisory Boards decided to close the production plant
in Tredegar (Wales, UK) due to falling demand for four-wheel dumpers.
Production will be transferred to the Linz site in Austria.

Outlook
The Group expects the construction industry downturn to prevail throughout
the rest of the current year and into 2009, especially in the US and
Western Europe. This, combined with increased competitiveness on the
market, will impact customer order patterns for both compact and light
equipment. Based on this assumption, the Group revised its forecast at the
end of July and is now aiming to achieve sales of at least EUR 870 million
and an EBITDA margin of at least 11 percent. In addition to purchase price
allocation, this also takes account of consolidation effects from the
elimination of interim profit that was not realized as a result of
company-internal sourcing of equipment for rental fleets. To ensure its
earning strength, the company will continue to streamline processes and
cost structures. The 2009 budget, which is currently being prepared, aligns
investment plans for the coming fiscal year with the current market
dynamics. 'We see the company in a strong position following the merger and
anticipate promising sustainable growth opportunities in the medium to long
term,' concludes Sick.

Key Wacker Group* figures for Q3

In EUR million 9M/2008 PPA** 9M/2008 9M/2007 Difference
without PPA** with PPA** as a %

Revenue 684.7 0 684.7 504.2 +35.8
EBITDA 92.5 1.1 91.4 83.2 +9.8
EBIT 65.9 5.1 60.8 62.7 -3.0
EBT 64.4 5.3 59.1 62.1 -4.8
Group profit 42.1 3.7 38.4 42.7 -10.1

* The Neuson Kramer subgroup has been consolidated since October 1, 2007.
Differences may occur as a result of figures being rounded up or down.
** PPA = purchase price allocation

About Wacker Neuson:
Completed in 2007, the merger between the parent company Wacker
Construction Equipment AG and Neuson Kramer Baumaschinen AG has created a
major global manufacturer of light and compact equipment. With over 30
affiliates and more than 180 sales and service stations across the globe,
the new company offers an unparalleled product portfolio. All products
manufactured by the new organization will in future be branded Wacker
Neuson. The exceptions to this in Europe are Kramer all-wheel loaders and
the Weidemann brand, which will be retained and further developed for the
agricultural industry. With over 300 product categories and extensive
rental, spare parts and repair services, Wacker Neuson is the partner of
choice among professional users in construction, gardening, landscaping and
agriculture, as well as among municipal bodies and companies in the
industrial and recycling sectors. In June, the AGM resolved to rename the
company Wacker Neuson SE and change its legal form to a European company
(Societas Europaea).

Your contact partner at Wacker Neuson:

Wacker Construction Equipment AG
Imre Szerdahelyi
Head of Corporate Communication
Preußenstr. 41,
80809 Munich, Germany
Tel.
imre.szerdahelyi@eu.wackergroup.com
www.wackerneuson.com
11.11.2008 Financial News transmitted by DGAP

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Language: English
Issuer: Wacker Construction Equipment AG
Preußenstr. 41
80809 München
Deutschland
Phone: +49 - (0)89 - 354 02 - 0
Fax: +49 - (0)89 - 354 02 - 390
E-mail: info@eu.wackergroup.com
Internet: www.wackerneuson.com
ISIN: DE000WACK012
WKN: WACK01
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Hannover, Düsseldorf, Hamburg, München, Stuttgart

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