Wacker Neuson outlines its strategy to boost global presence

Wacker Neuson
Wacker Neuson plans to expand its presence as a worldwide manufacturer of light and compact equipment.

Guided by its Strategy 2022 road map, Wacker Neuson is systematically aligning itself with customer needs to meet the company’s goal of exceeding the EUR$2 billion mark.

The company’s strategy aims to expand its presence as a worldwide manufacturer of light and compact equipment. Europe and North America will continue to play an important role, as Wacker Neuson plans to intensify its activities in those core markets.

“There is still plenty of potential for us to grow in our main regions. We are particularly keen to leverage growth potential in our core business fields with compaction and concrete technology from our light equipment segment and products from our compact equipment offering,” said Martin Lehner, CEO of Wacker Neuson SE. “The aim of Strategy 2022 is to ensure that the company is focused 100 per cent on our customers’ needs. The three strategic pillars of focus, acceleration and excellence guide all of our actions here.”

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As part of its international expansion plans, Wacker Neuson is looking to markets like China. In January 2018, the company started series production of mini excavators at its new factory in Pinghu, near Shanghai. This sees Wacker Neuson enter the market as the trend toward more compact, smaller construction equipment rapidly gathers momentum in China.

“Over the coming years, we want to rank among the top three providers of core products based on market share in the industry. We also aim to grow faster than the market. In the past year, we have proven that this is possible,” Lehner said.

Within the framework of the Strategy 2022 road map, Wacker Neuson has set itself the goal of exceeding the EUR$2 billion revenue mark in the medium term and achieving an Earnings Before Interest and Taxes (EBIT) margin of more than 11 per cent. As well, the company aims to gradually reduce net working capital to below 30 per cent of revenue. This will also have a positive impact on free cash flow. In order to finance its growth plans, the company secured US$100 million with investors at the end of February to secure its long-term financing needs.

Wacker Neuson’s Strategy 2022 road map also aims to capitalize on megatrends. “We firmly believe that alternative drive technologies will play an important role in the future. This trend is being accelerated not only by changes in legal regulations, but also by rising demand from the market as the compelling ergonomics, environment, health and safety benefits of electric motors resonate with more and more users,” Lehner said.

“Our developers are working on numerous new developments that will open up major opportunities for us to play a leading role in shaping the future of light and compact equipment. Our goal is to offer a genuine zero-emissions alternative in each of our core product groups.”

Digitalization is another megatrend shaping product development, production, sales and service. Topics such as augmented and virtual reality have become increasingly important in recent years. According to the company, state-of-the-art technologies are already being used for product development and for optimizing production activities. Digital solutions will also change sales and service activities across the industry, enabling providers to deliver more benefits to customers.

Double digit growth

Last year, Wacker Neuson recorded double digit revenue growth.

Revenue for 2017 rose 13 per cent to EUR$1.534 billion, which the company attributes to gains in market share in a favourable business climate and an upswing in nearly all regions.

“We were able to further expand our market reach at national and international level and gain new market shares,” Lehner said.

Revenue in Europe grew 11 per cent to EUR$1.130 billion. In the Americas, revenue grew to EUR$358 million, representing a 23 per cent increase. Growth in the Americas was driven by worksite technology products as well as skid steer loaders manufactured in the United States and compact equipment imported from Europe.

Restructuring

Wacker Neuson began tweaking its structure last year in order to improve profitability in the long term and reduce complexity across the company following years of expansion. This year, the company will incorporate two of its 10 production plants into existing facilities. The United States factory in Norton Shores, Michigan, will relocate to the much larger facility in Menomonee Falls, Wisconsin. The light equipment production plant in the Philippines will be moved to the new factory in China. Furthermore, the two logistics companies will be incorporated into the production company in Germany and the sales company in the United States.

Forecast for 2018

With the Strategy 2022 underway, Wacker Neuson is optimistic about 2018.

“Our markets are currently intact and forecasts give us every reason to be confident. The year also got off to a great start for us,” Lehner said. “We expect revenue to amount to between EUR$1.65 and 1.70 billion. This represents an increase of 8 to 11 per cent relative to 2017. We also expect the EBIT margin to improve to between 9 and 10 per cent.”

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