Release Date: March 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Wacker Neuson SE (WKRCF, Financial) successfully reduced its net working capital ratio to 31.7%, below the forecasted 34%, due to significant inventory reductions.
- The company doubled its free cash flow in the fourth quarter, reaching EUR185 million by year-end.
- Despite challenging market conditions, the service business, including rental, spare parts, maintenance, and repair services, grew by 4% year on year.
- The company has set and achieved a 66% reduction in its Scope 1 and Scope 2 CO2 emissions, surpassing its 50% target.
- Wacker Neuson SE (WKRCF) is rolling out a new app to enhance customer experience by providing easy access to machine-specific data and support resources.
Negative Points
- Revenue for the fiscal year 2024 declined by approximately 16% year on year, primarily due to weak market demands and excessive dealer stock.
- The EBIT margin fell to 2.7% in the fourth quarter, impacted by one-time restructuring costs and higher R&D expenses.
- The Americas region saw a significant revenue decline of 19%, with challenges in the US, Canada, and Latin America.
- The Asia Pacific region experienced a 31% drop in revenue, driven by decreased demand in Australia and China.
- The first quarter of 2025 is expected to remain weak, with improvements anticipated only from the second quarter onwards.
Q & A Highlights
Q: Could you elaborate on your current direct shipments between Europe and the US, especially regarding tariffs and the John Deere contract?
A: Karl Tragl, CEO, explained that the flow of goods between Europe, the US, and China is less than EUR100 million, limiting exposure to tariffs. The machinery is only partially affected by tariffs on steel and aluminum. Regarding the John Deere contract, specific contractual details cannot be disclosed, but it involves a joint effort to balance costs. Machines are split into two packages, with smaller volumes from Linz and larger volumes manufactured in Menomonee Falls.
Q: You mentioned an improvement in order intake. Can you provide more details on the book-to-bill ratio and production plans for Q2?
A: Karl Tragl, CEO, stated that since the beginning of the year, the book-to-bill ratio has been above 1, with February reaching 1.3. This indicates growth, and they are confident in increased production volumes for Q2, preparing for a ramp-up in supply chain and locations.
Q: Regarding Q1 expectations, will the positive effects from the Fit for 2025 program be visible, or will we see improvements only from Q2 onwards?
A: Christoph Burkhard, CFO, noted that Q1 will not show a positive upturn due to savings from the program. The overriding impact in Q1 is still the depressed volume, and restructuring costs will also affect Q1 results. The positive effects are expected to be more visible from Q2 onwards.
Q: Can you quantify the restructuring effects for Q1 and the full year?
A: Christoph Burkhard, CFO, indicated that for the full year 2024, restructuring costs amounted to around EUR8 million, with an additional EUR3 million expected in Q1 2025. These costs are factored into the guidance for the full year 2025.
Q: What is the expected timeline for the impact of the German infrastructure program on your order intake?
A: Christoph Burkhard, CFO, explained that the impact of the German infrastructure program will likely be seen towards 2026. The program will stimulate demand, but specifics are still unclear, and they are cautious about projecting numbers at this stage.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
