Good afternoon, everybody, and welcome to the 2025 Full Year Earnings Call of the Wacker Neuson Group. My name is Peer Schlinkmann, Head of Investor Relations and Corporate Communications. Thank you for joining today on the occasion of the release of our 2025 full year results. As usual, we will first start with the operational and financial results of the fiscal year 2025 and give additional insights on the recent developments as well as our outlook for 2026. Following this, we are happy to answer your questions in a Q&A session. If you're not able to follow today's call via the webcast, the presentation slides are also available for download at wackerneusongroup.com/investor-relations. Please note that the entire call, including the Q&A session, will be recorded and the replay will be made available on our corporate website by the end of the day.
Now I would like to hand over to our executives, Karl Tragl and Christoph Burkhard, who will, as usual, lead you through this call.
Thank you, Peer. This is Christoph Burkhard, Chief Financial Officer of the Wacker Neuson Group. Welcome everybody to our earnings call and thank you for joining.
Thank you. Dear all, a warm welcome from my side too, and thanks again for joining today's conference call. I'm Karl Tragl, the Chief Executive Officer of the Wacker Neuson Group. I would like to start the presentation with a brief overview of our key financials for the fiscal year 2025. Our revenue stood at EUR 2.2 billion, which is essentially on par with the previous year's level. After a weak start in the first quarter, characterized by low capacity utilization following the downturn in 2024, we saw a gradual operational recovery as the year progressed. Throughout the year 2025, our order intake level has been slightly above revenue, resulting in a book-to-bill ratio of above one. Our earnings before interest and taxes amounted to EUR 132 million, resulting in an EBIT margin of 6.0%.
While this represents an improvement of 0.5 percentage points compared to 2024, the margin was impacted by one-time effects in the fourth quarter. These included legal and advisory costs related to takeover talks, adjustments to our virtual stock option plan and certain asset impairments. Without these effects, the recovery in earnings quality would have been even more visible, especially following the improving momentum which we gained since the second quarter. At year-end, we saw a very successful development of our net working capital ratio. We managed to reduce it faster than originally forecasted, reaching about 29%, which is below our strategic target of 30%. This is, among others, a result of disciplined inventory management and the efficiency agenda which we've continued throughout 2025.
The significant reduction of net working capital led to another increase in our free cash flow, which reached EUR 202 million by the end of the year. Christoph will explain the financial details in more depth. Now let's take a closer look at our performance across business segments and regions. In 2025, we continued to navigate a challenging market environment, although we saw a recovery starting in the second quarter of 2025. Starting with the business segments, light equipment and compact equipment, we had a powerful presence and stood out visibly at the bauma trade fair in April, which led to higher revenue and increased profitability in the second quarter. However, development remained on that level in the following quarters as geopolitical instability, high interest rates, and rising costs continued to weigh on construction industry.
In detail, light equipment grew by 2% to EUR 460 million, while compact equipment declined by 2% to EUR 1.26 billion. On the one hand, demand for telehandlers, especially in Europe and skid steers in the U.S. was below previous year. On the other hand, we saw continued growth in demand for dumpers and excavators in Europe. Our services business showed further growth, increasing to EUR 521 million and accounting for 23% of total revenue. Strong demand for spare parts and used machines, combined with structural improvement of our service levels out of the new logistics hub in Mühlheim-Kärlich supported this positive trend. Revenues in Europe, representing 79% of group revenues, rose by 1% to EUR 1.75 billion. While Germany and France were weaker, we saw growth in the U.K. and Switzerland.
Our brands, Kramer and Weidemann, with focus on the agriculture industry, also regained momentum late in the year. In the Americas, revenue declined by 7% to EUR 422 million, heavily impacted by customer reluctance and U.S. tariffs. In Asia Pacific, revenue fell by 16% to EUR 44 million, primarily driven by a slowdown in Australia. In summary, despite regional headwinds and a weak start into the year 2025, the recovery in Europe and our stabilizing order intake provide a solid foundation for this year, 2026. I will come back to our outlook at the end of the presentation. I will now hand over to you, Christoph, for more insights into our financials.
Thank you, Karl. I will talk now about working capital. With 29.2%, we were able to stay with our working capital ratio below our target ratio of 30%, which clearly exceeded our expectations. This decrease of working capital was primarily driven by the following reasons. Firstly, we increased our trade payables preparing for 2026. Secondly, we maintained our discipline around inventory management, and this despite the complexities around the U.S. tariff situation. Thirdly, a reduction of receivables also supported the overall results. As an overriding feature, I would like to mention our ongoing and successful efforts to systematically improve our integrated system-based planning processes across the entire group. This concretely enhances our planning quality end to end, starting with the sales forecast all the way through logistics, the production planning and supplier management.
Eventually, all this has a sustainably positive impact on all working capital levers. Looking ahead to 2026, our expectations towards moderate growth will certainly influence net working capital throughout the year. However, we remain fully committed to our target ratio of below 30%. Now let's have a look at our cash flow performance. A good cash conversion into operating cash flow, plus the mentioned positive working capital momentum, led to a strong cash contribution of EUR 86 million in the fourth quarter. This again generated an overall free cash flow of EUR 202 million in 2025, even exceeding previous year's EUR 185 million. As a consequence, we could reduce our net debt to EUR 185 million, reaching the lowest level since the first quarter in 2022.
Compared to the previous year, net debt decreased by over 40%, and this translated into a further reduced leverage ratio of 4.6. To complete the picture, an equity ratio of 62% underscores the robustness of our balance sheet. Now, let's have a look at our dividend payout. The Wacker Neuson Group is known for its continuity in delivering attractive shareholder dividends, one of the main pillars of our financial policy. Despite the challenging market environment in the past year, our focus remained clear: to successfully increase profitability while simultaneously improving operational efficiency and therefore preparing ourselves for the next growth phase in times of higher geopolitical uncertainty. Against this background, we want our shareholders to participate in our results again.
Therefore, we will propose a dividend of EUR 0.70 per share for the past fiscal year at the annual general meeting, which will be held on May 13, here in Munich. This corresponds to a payout ratio of around 61% of our earnings per share and marks again an attractive dividend yield of 2.9% based on the 2025 year-end share price. With this, back to you, Karl.
Thank you. In the following, we would like to highlight a couple of operational milestones which we completed in 2025. Kramer celebrated its 100th anniversary. To mark this milestone, a completely revised machine design was introduced. Moreover, new wheel loaders and a new telehandler were launched. We also attended numerous construction and agriculture trade fairs, like bauma and Agritechnica. The trade fairs do not only provide additional sales stimulus, but also enable us to meet our sales partners and our end users and understand their needs in personal discussions. The strong customer interest was also reflected by significant order intake at the trade fairs. For the first time in September, we exclusively presented new products to key customers as part of a pre-launch 2026 event.
We already announced that we have successfully started the delivery of first excavators for John Deere from Linz in 2025. Very important, in fall, we completed the production line for further models at our U.S. plant, which enables us to start manufacturing there in 2026. Last but not least, we successfully launched numerous new Wacker Neuson, Weidemann, and Kramer light and compact equipment machines. Our zero emission portfolio was expanded as well, adding further fully electric excavators, battery powered wheel loaders, as well as different light equipment solutions to our portfolio. Additionally, we introduced new digital solutions such as a Wacker Neuson and Weidemann app to provide our customers an even deeper insight into our products and to consistently support them during machine operation life cycle.
Finally, I would like to conclude now with our outlook for 2026 and key topics which are currently shaping our industry. The global economic and geopolitical environment remains volatile and characterized by significant uncertainty. Factors such as subdued investment momentum, trade conflicts, and increasing protectionism continue to impact planning certainty. This is further intensified by ongoing geopolitical tensions, including the war in Middle East since beginning of March. This adds another layer of complexity to energy markets and global supply chains. At the same time, current market indicators point towards a moderate recovery, albeit at a slower pace than previously expected. Against this backdrop, we view the 2026 fiscal year with cautiously positive expectations. In Europe, we anticipate an environment that remains challenging, yet stabilizing, supported by public modernization investments.
In North America, we expect solid demand from building of data centers and further infrastructure projects despite ongoing U.S. tariffs. Overall, we anticipate a slight market upturn in 2026. With great trust in our customers, employees, investors, and in our strategic plan, this should enable us to achieve a moderate increase in revenue and a higher EBIT margin. This is our guidance for 2026. We anticipate a revenue between EUR 2.2 billion and EUR 2.4 billion and an EBIT margin in a range of 6.5%-7.5%. We plan to invest another EUR 70 million - EUR 90 million in the course of the year, and we aim to keep our net working capital ratio below the strategic target of 30% by the end of 2026.
In 2026, we will consistently pursue our operational agenda. However, the market environment remains dynamic, shaped by realities of the past two years, low market volumes and ongoing geopolitical uncertainties ranging from U.S. tariff policy to the most recent war in Middle East. Furthermore, we must acknowledge that electrification in construction and agriculture is progressing slower than originally expected. Despite these headwinds, we remain fully committed to our Strategy 2030. It remains our North Star with profitability now moving even more into our focus. During the course of 2026, we will reevaluate both the underlying market scenarios and the 10 strategic levers. Regarding our revenue up until 2030, we now rather anticipate a level of EUR 3.5 billion. However, what stands unchanged is our commitment to sustainable, profitable growth and continuous improvement of operational performance.
Our profitability target, an EBIT margin of more than 11%, remains the core objective of our Strategy 2030. Let me summarize the key takeaways of today's presentation. First of all, we have taken action and we improved our working capital management as well as operational efficiency. We are well prepared to benefit from this in the expected economic upswing. As for the outlook 2026, we expect moderate revenue increase and EBIT margin improvement while markets will still be influenced by U.S. tariff policy and geopolitical uncertainties. We focus on innovation and we have new machines already in the pipeline. Moreover, we constantly enhance our solutions. Our strong balance sheet is a foundation to execute our plans and drive future growth.
We will reassess underlying market scenarios of our Strategy 2030, and we stay committed to our profitability target of more than 11% EBIT margin. Thank you for your continued trust and for joining our earnings call today. As we move into 2026, we are energized by the opportunities captured in our motto, driving progress, building success. We look forward to sharing our journey with you throughout the year. If you would like to connect, our investor relations team is available to provide further insights. Before we open the floor now to your questions, I want to express my sincere gratitude to all our employees of the Wacker Neuson Group. Their dedication and their hard work remain the true engine behind our value for customers and shareholders. Nobody's perfect, but a team can be. Thank you for listening.
Operator, we are now ready to start the Q&A session, and we are very much looking forward to answering your questions.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Stefan Augustin from Warburg Research. Please go ahead.
Yes, hello. Thank you for taking the question. The first one is actually on the current order intake trends and what have you seen actually in the very short term, is there anything that you can tell us over the last four weeks since the war in Iran started and did this in any way impact so far order intake behavior at your customers? That would be the one to start with, I think.
Thank you for your question, Stefan. This is Christoph. Let me take your question. We see now starting into the new year in January and in February a kind of very first tentative trend for a better book-to-bill ratio above one. Currently we stand at around 1.2, 1.3 within the group. That ratio is allocated across our landscape with fairly strong order intake momentum in the U.S. after very weak months towards the end of previous year, as you recall. We had a good start into the new year in the Americas, I should say. Europe is also okay. It's above 1.
The only exception still being Germany, where it's kind of sluggish. I think that somehow represents still the overall sentiment in Germany. We are all waiting for a kick start in the German economy. Overall, we are moderately optimistic also with respect to order intake.
Thank you. One follow-up here directly. Is that good development in the U.S. in any way connected to the next model ramp up by Deere or is that something that?
No.
Should come on top later in the year?
Yes. That's independent from the John Deere collaboration. Looking deeper into root causes there, the feedback we receive is around, you know, we have been frequently talking about this famous dealer inventory, inventories which have come down. The second thing is we have been looking at quite some months of reluctance, particularly of the big rental companies, to place new orders, that eventually seems to have come to an end. I mean, anyway, they couldn't, you know, stay away from investment from forever. That's also probably what is gaining momentum here.
Okay. Thank you very much, and also for that, for the color on it. I also like your statement that you will focus on the 2030 targets in the longer term on the margin more than on the growth. Maybe as a first step in 2026, how much of that would you expect in the margin improvement is actually intrinsic and rather on costs and processes, and what part is actually on the higher volume piece?
It's rather on costs and processes in 2026. Definitely. That also does explain already, let's say, the building block then moving into 2027, where we would expect then more to benefit also from growth. Yeah. The growth aspect is not the key in 2026.
Yeah. Would it be fair to say if the sales would be at the higher end, there would be an additional probability to also be better on the margin side? Is that an implication of your statement?
I can buy into this logic without going into specific amounts, but I follow your logic, Stefan, definitely.
All right, great. Thank you very much.
You're welcome.
The next question comes from the line of Lukas Spang from Tigris Capital. Please go ahead.
Yes. Hi, gentlemen. I would like to start with a topic you just mentioned in your presentation. It's the data center area, and I think that's a very interesting part in the building segment in general. Also, it's probably a very small portion in general, but is it quantifiable for you as a group how many machines or equipment you are delivering to this specific area? So is it possible to quantify how big the revenue you are making with all stuff regarding data center? And what could be the potential in the future for you? That would be my first question.
Lukas, thank you for the question. Karl speaking here. I mean, it was just a week ago, I visited U.S., and I also visited a couple of partners and customers, and that was a topic throughout all the discussions as a positive momentum in U.S. in time, and it should be sustainable because it's driven by artificial intelligence, and that's something which will go on for more time and into the future. It's the data center is driving a lot of infrastructure around because you need fiber cables to connect them, you need roads to come to them, you need other topics to people bring them over there. It's not quantifiable. We cannot quantify like a specific topic in the U.S., but as I said, it's for me, it's a sustainable topic driven by artificial intelligence, and it is driving more investment around, just to connect it.
Okay. You would say that it's more driven from the U.S. than Europe currently?
Yeah, obviously. I mean, just reading through the papers or talking to people, there's only a few data centers currently as projects in Germany, as far as I know at least. There's a lot in the U.S. Yes, I fully agree with what you said.
I think we're talking about 20 or something like that more in the U.S.
On the guidance, it's a very broad range in terms of revenue. Again, like last year. What kind of scenarios did you bake in for the lower and the higher end on the revenue guidance?
Yeah. Lukas, I guess we were a bit burned by last year, and to be very frank, and by last year, particularly by last year's third quarter. Yeah. We lost a little bit trust in short-term recovery with significant numbers. So let me put it this way, the lower end is certainly conservative, and we wanted to really have a gradual approach here in a sense that we by May, when we will talk again about Q1, you know, our picture will certainly be much clearer around the lower end of the guidance. We want now to accomplish a successful first quarter, and then we'll see further. Yeah.
Yeah. The higher order intake you mentioned now and the, yeah, I would say very nice book-to-bill ratio in Q1 will be then mostly revenue in Q2. Is that right?
Yeah. That's probably right. However, I need a little bit to tone the enthusiasm down in a sense. Compared to last year, this is good in terms of order intake. However, there are two qualifications to it. Firstly, of course, we are looking at a book-to-bill ratio in connection with two months with relatively lower absolute revenues because January and February are months with lower revenues, winter months, plus months with relatively fewer working days. The heavy months are coming now. March, of course, is supposed to be a strong sales month, and here we need to see again also the higher book-to-bill ratios. That still remains to be seen.
Secondly, of course, again, we went through this kind of depressing period partly in 2025 with low order intake. For the time being, I would not go beyond the statement that this is now according to what we need also. We are not yet talking about upside or higher end guidance. That's basically the calibration you need to understand behind our statements.
Yeah. For Q1, after the strong Q3 and Q4, I think also order momentum in the second half, and also book to bill was good. There should be an improvement Q1 versus Q1 in terms of revenue.
Yes. Absolutely right.
Thanks.
Yes.
That's from my side.
Sure.
Thank you.
Thank you.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Peer Schlinkmann for any closing remarks.
Yeah. Ladies and gentlemen, as we can see, there are no further questions in line. This brings us to the end of our conference call. As usual, if you have any further questions, please do not hesitate to contact me or the entire investor relations team via phone or email. If you would like to meet in person, please let us know or check our website and financial calendar for all relevant roadshow dates in the coming weeks and months. Thank you again for joining our call, and we wish you all of you pleasant Easter holidays.
Thank you.
Have a great day. Thank you.
Thank you, everybody.
Thank you. See you.
Bye-bye.
Bye-bye.