Wacker Neuson Annual Report 2015)
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Annual Report 2015 Annual Report 2015 Our story – our success. Wacker Neuson Group Figures at a Glance 2015 WACKER NEUSON GROUP AT DECEMBER 31 IN € MILLION 2015 2014 Changes Key figures Revenue 1,375.3 1,284.3 7.1% EBITDA 171.3 196.3 -12.7% Depreciation and amortization 67.7 60.1 12.6% EBIT 103.6 136.2 -23.9% EBT 97.5 130.1 -25.1% Profit for the period 66.2 91.5 -27.7% Number of employees 4,632 4,372 5.9% R&D ratio (incl. capitalized expenses) as a % 3.2 3.2 0.0 PP Share Earnings per share in € 0.94 1.3 -27.7% Dividends per share in € 0.501 0.50 0.0% Key profit figures EBITDA margin as a % 12.5 15.3 -2.8 PP EBIT margin as a % 7.5 10.6 -3.1 PP Key figures from the balance sheet Non-current assets 850.7 814.1 4.5% Current assets 701.4 633.5 10.7% Equity before minority interests 1,064.1 1,011.7 5.2% Gearing as a % 18.7 17.7 1.0 PP Equity ratio before minority interests as a % 68.6 69.9 -1.3 PP ROE as a % 6.4 9.4 -3.0 PP Average working capital to revenue as a % 40.2 38.4 1.8 PP Capital employed (average) 976.6 897.1 8.9% ROCE II as a % 7.3 10.8 -3.5 PP Cash flow Cash flow from operating activities 131.0 106.8 22.7% Cash flow from investment activities -113.2 -85.3 32.7% Investments (property, plant and equipment and intangible assets) 118.4 90.3 31.1% Cash flow from financing activities -6.6 -23.0 -71.3% Free cash flow 17.8 21.5 -17.2% 1 Dividend proposal for the AGM on May 31, 2016. All consolidated figures prepared according to IFRS. A nine-year overview of key indicators is provided at the end of this report. Revenue Development by Region IN € MILLION (AS A % OF TOTAL REVENUE) +7.1% +2.7%1 1,375.3 1,284.3 47.5 Asia-Pacific (3.5%) 38.9 Asia-Pacific (3.0%) +22.1% +12.0%1 323.7 Americas (25.2%) +7.7% 348.5 Americas (25.3%) -5.3%1 921.7 Europe (71.8%) +6.2% 979.3 Europe (71.2%) +5.5%1 2014 2015 1 Adjusted to discount currency effects. Revenue Distribution by Business Segment AS A % (IN € MILLION) 20.3 services (283.9) 49.9 compact equipment (697.5) 29.8 light equipment (417.1) 2015: Key Performance Indicators (KPI) Revenue Equity ratio (at Dec. 31, 2015) At a glance € 1.38 billion 69% (+7% on previous year) (Equity: € 1.1 billion) EBITDA margin Return on equity (ROE) 12.5% 6.4% (-2.8 PP on previous year) (-3.0 PP on previous year) EBIT margin Gearing 7.5% 18.7% (-3.1 PP on previous year) (+1.0 PP on previous year) Net earnings per share Free cash flow € 0.94 € 17.8 million (-28% on previous year) (previous year: € 21.5 million) Economic Value Added (EVA) Share price development (1/1–31/12/15) € 1.1 million -16% (previous year: € 32.4 million) (-€ 0.2 billion market capitalization1) 1 Market capitalization at Dec. 31, 2015: € 1.0 billion. The Wacker Neuson Group To Our Shareholders Our To The Wacker Neuson Group is an international family of companies and a leading manu- facturer of light and compact equipment with over 50 affiliates and 140 sales and service stations. The Group offers its customers a broad portfolio of products, a wide range of services and an efficient spare parts service. The product brands Wacker Neuson, Kramer and Weidemann belong to the Wacker Neuson Group. 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 industries such as recycling, energy and rail transport. In 2015, the Wacker Neuson Group achieved revenue of EUR 1.38 billion and employed 4,600 people worldwide. Content 2 To Our Shareholders 41 Combined Management Report 2 Letter from the CEO 5 Management 107 Consolidated Financial Statements 6 Our story – our success. 22 Global Presence 24 Product Overview 156 Further Information 26 The Share / Corporate Governance 156 Glossaries 162 Photo Credits 26 Our Share in 2015 164 9-Year Comparison 30 Report by the Supervisory Board Publishing Details / Financial Calendar 34 Corporate Governance Declaration and Report 2 Wacker Neuson Group Annual Report 2015 To Our Shareholders Dear Ladies and Gentlemen, Fiscal 2015 was not an easy year – neither for our customers nor for the Wacker Neuson Group. Business trends in 2015 mirrored volatility in the industries we serve with our products and services. In the first quarter of the year, we reported growth of 11 percent compared with the previous year, which was slightly above our target corridor for total revenue for the year. And in Q2, the pace of growth increased further to 16 percent. However, the situation then took a marked downward turn during the second half of the year, with Q3 revenue dipping just below the prior-year level. Our performance improved slightly in the fourth quarter, with revenue topping the prior-year figure by around three percent. Worsening economic conditions in many regions of the world had an unex- pectedly strong impact on us over the second half of the year. As a result, we were forced to adjust our revenue and earnings forecast for the year downwards in October. Yet despite these trends, we were able to report record revenue of EUR 1.38 billion for 2015 (+7.1 percent). In the following, I would like to summarize the key factors that impacted on our business: The oil and gas industry is currently facing an existential crisis, forcing many companies to cease opera- tions. This is an important sector for us, especially in North America. The crisis is primarily due to a collapse in prices, for example for Brent crude, which has slumped to its lowest level in ten years. The continued downswing in the raw materials market is negatively impacting important countries for us such as Brazil, Chile, Russia, South Africa, Canada and Australia, where we primarily distribute light equipment products. In addition, the strong US dollar is squeezing exports of the products that we manufacture in the US, including generators, heaters and light towers. Our compact equipment segment was affected by the downturn in the European agri- cultural equipment sector. During the first half of the year, we were able to buck the trend and remain on a growth path. By the second half of 2015, We are strengthening our position in core however, our agricultural business with wheel loaders, tele- scopic handlers and tele wheel loaders deteriorated mark- markets by intensifying our cross-selling edly. Prices for milk and other agricultural products are activities and further expanding profitable currently at a six-year low. This is dampening willingness lines of business. to invest amongst agricultural landholders. The construc- tion equipment industry is also suffering from continued low demand in France and Russia. Furthermore, many emerging economies are struggling with large currency losses vis-a-vis leading international currencies. As a result, the price of machines has become much less attractive for customers in these markets. This is particularly affecting markets in South America, Australia, South Africa and Canada. These trends have left a significant mark on our earnings. Profit before interest and tax (EBIT) decreased by 24 percent relative to fiscal 2014, which was a very strong year in terms of earnings. The EBIT margin dropped to 7.5 percent. This was primarily due to crisis-hit markets, increased competition, a change in our regional and product mix relative to the previous year and negative To Our Shareholders 3 Cem Peksaglam CEO currency effects. It goes without saying that we are countering these negative trends wherever possible. For example, we are strengthening our position in core markets by intensifying our cross-selling activities and further expanding profitable lines of business. We are reorganizing the aftermarket business across the Group in order to develop revenue and – more importantly – earnings potential and to strengthen customer loyalty in the services sector. Our new online store and the expansion of our portfolio of financial services should boost sales further. We are focusing more than ever on strict cost control, targeted cost optimization programs and process efficiency gains, and are already seeing positive results from procurement synergies, the optimization and control of logistics processes at Group level and targeted restructuring measures. In our factories, our concerted efforts to roll out lean management practices as well as to standard- ize and develop platforms are increasingly paying off. We are already reaping the initial benefits of our hard work here. In the medium term, we expect to achieve annual cost savings in the double digit million euros range. Our strategy is geared towards achieving sustainable profitable growth. In line with our com- mitment to develop products in the regions, for the regions, we started building an assembly facility for mobile generators in Brazil in 2015. This facility will start serving the South American market from Q2 2016 on. We continued to update our product portfolio, launching numerous new developments and adapting products to regional market requirements. We were able to further strengthen our position as an innovation leader in the field of alternative drive technologies by launching more battery-powered machines as part of our zero-emissions range.