Wacker Neuson SE — Earnings Release 2008

Aug 14, 2008

News Details

Corporate | 14 August 2008 07:43

Wacker Construction Equipment AG: Wacker Construction Equipment AG pursues growth strategy

Wacker Construction Equipment AG / Half Year Results/Interim Report

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Wacker Construction Equipment AG pursues growth strategy
• Sales and EBITDA increase in first half of 2008 due to merger
• Unit sales of light equipment drop due to downturn in markets in the US
and Western Europe
• Lively demand for compact equipment in construction and agricultural
sectors
• High levels of investment to drive launch of compact equipment and
rental business in Central and Eastern Europe
• Expansion of development and production capacity

(Munich, August 14, 2008) Wacker Construction Equipment AG (soon to be
Wacker Neuson SE) made good progress during the first six months of this
year despite increasingly uncertain market conditions. Fuelled by the
merger, sales rose 38.3 percent from EUR 341.7 million to EUR 472.4
million. As a result of the merger, profit before interest, tax,
depreciation and amortization (EBITDA) increased 14.4 percent from EUR 55.3
million to EUR 63.2 million. The Group intends to pursue its long-term
growth strategy.

Group is financially sound and profitable
'During the first half of fiscal 2008, we continued to implement measures
that consolidate the success of the merger,' states Dr.-Ing. Georg Sick,
CEO of the future Wacker Neuson SE. 'This involves making the planned
investments to further the global launch of our compact equipment portfolio
and to expand rental business in Central and Eastern Europe. It also
entails the continued expansion of our development and production
capacities.' As part of this expansion and transition phase, the Group has
deliberately opted to ramp up deliveries to its rental and demo fleets
using stock produced at its own facilities. This internal build-up of stock
does have an initial dampening effect on revenue and profit that would
otherwise have been generated had the equipment been sold to end customers,
but it also enables the company to fast-track the roll-out of compact
equipment and strengthen the profitable rental business in the long term.
'The measures we implemented following the merger are proceeding according
to plan and the merger itself has been well received by our customers,'
emphasizes Sick. The Group is in a strong position and financially sound
thanks to its business model and an equity ratio of 71.9 percent. The Group
is committed to making the investments scheduled for fiscal 2008. In total,
EUR 57.5 million of the planned EUR 100 million has already been invested
in the first six months of the year alone. EUR 25.7 million of this
(budgetary forecast: EUR 30 million) was channeled into the rental business
in Central and Eastern European countries where the company is not in
competition with its customers.

Uncertain construction market conditions – strong demand from agriculture
sector
In the first half of the year, the downturn in global market trends was
fuelled by a number of factors including the US subprime crisis, the
weakening of the US dollar and increases in raw materials prices. These
factors have had a particularly adverse effect on the company’s key
construction markets in the US and, increasingly, Western Europe. After
sound performance in April, these developments resulted in a significant
drop in demand for products in the light equipment business segment in May
and June, particularly in the US, Spain and the UK. In contrast, light
equipment sales performed strongly in the Asia, South Africa, South America
and Eastern Europe regions. At EUR 21.4 million, sales generated by the
rental business in Central and Eastern Europe remained stable at the same
high level as the previous year (EUR 21.6 million). The production facility
at Norton Shores (USA) and the new plant for Kramer Werke GmbH in
Pfullendorf (Germany) started operations ahead of schedule. Demand for
agricultural products manufactured by Weidemann GmbH was strong. Sales
generated by Weidemann GmbH rose 10.9 percent to EUR 37.4 million.

Outlook
The Group expects the downturn in the US and Western European construction
industries to continue throughout the rest of the year and to impact
customer order patterns for products in the light and compact equipment
segments. At the end of June, the volume of open orders for compact
equipment was 12 percent below last year’s record high. The significantly
dampened current market climate together with the figures for the first
half of 2008 have led the Group to revise its forecast for fiscal 2008 (ad
hoc press release dated July 31, 2008). Wacker Construction Equipment AG
(soon to be Wacker Neuson SE) now expects sales of at least EUR 870 million
and a minimum EBITDA margin of 11 percent following purchase price
allocation for a year that will see intensive integration and market
penetration activities. The Group occupies a strong position in the wake of
the merger and, taking into account the medium- and long-term forecast for
the construction and agricultural industries, continues to view its
prospects as positive. 'Overall, we are confident of achieving sustainable
growth in the medium term and therefore remain committed to our corporate
strategy,' comments Sick. The global roll-out of compact equipment via the
existing sales and service network, in particular, should provide the Group
with new impetus for 2009 and beyond.

Key Wacker Group* figures for H1
In EUR million
2008 2008 2007 Difference
without PPA** PPA** with PPA** as a %

Revenue 472.4 0 472.4 341.7 +38.3
EBITDA 64.2 1.0 63.2 55.3 +14.4
EBIT 47.1 4.0 43.0 41.9 +2.7
EBT 46.6 4.2 42.4 40.8 +4.1
Group profit 31.7 2.9 28.8 24.8 +16.0

* 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. +49 - (0)89 - 354 02 - 251
imre.szerdahelyi@eu.wackergroup.com
www.wackerneuson.com
14.08.2008 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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