2018 was one of the worst years on record for Waberer’s International, finding virtually every headline financial metric in a dangerously precarious condition as a result of a hugely disappointing operating performance – partly impacted by a number of road market-related headwinds, but mainly driven by poor cost control and an underfunded balance sheet.
The Hungarian trucking group launched a comprehensive restructuring “to restore profitability including fleet reduction, trade lane optimisation programme, transit cost and fuel cost optimisation, headcount reduction and SG&A cost savings”.
While annual revenues grew by 8.5% to €731.9m, larger volumes were detrimental to a business whose net leverage climbed swiftly to 4.3x from 2.7x one year earlier.
Cost of goods sold rose by 14.3%, pushing down gross profit down 13.4% to €121.7m. Meanwhile, operating costs surged, hitting its underlying operating profitability and adjusted cash flows, with EBITDA falling 25.2% to €64.2m, and producing in a negative EBIT to the tune of €2m.
Net losses amounted to €13.9m, against €21.4m of net income in 2017.
In Europe, the economic environment was characterised by a slowdown in demand, it said, as fourth quarter GDP showed “small or even negative growth in some of the key markets of the group in the Eurozone”.
Moreover, the end of the year was particularly challenging.
It added that “production outages in factories in the automotive sector also contributed to decreasing demand for transportation services and total industrial production decreased by 2-4% in the fourth quarter. The retail season was also weak with retail trade registering less than 2% growth in all and a decrease in some of the key European markets.”
Overcapacity in the European transportation sector “worsened and European transportation market prices are estimated to have decreased by as much as 6% compared to the same period in 2017”.
The economic environment in Hungary, however, remained favourable with 5% GDP growth in the fourth quarter and a similar rate of growth in industrial production and retail trade. On the bright side it managed to churn out €13.8m of free cash flow, thanks to careful working capital management.
Its core international unit turned over €551m, up 7.7% for the year, but that division’s EBITDA plunged 30% to €43.1m. Regional contract logistics activities grew even faster, posting €137m of revenues, but a growth-led strategy at group level contributed to hefty losses, while its capital structure was seriously weakened.
A new chief executive, Robert Ziegler, was appointed in the first quarter.
Mr Ziegler said the most important element of the short-term measures “is the reduction of loss-making capacities, which should lead to the increased utilisation of our fleet. Orders of more than 300 trucks have been stopped and should profitability of the fleet not improve sufficiently, we are prepared to reduce the fleet further”.
Source: Transport Intelligence, March 21, 2019
Author: Alessandro Pasetti
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