Macroeconomic ‘turbulence’ sees downturn in equipment orders
By Leila Steed26 July 2023
Tiltrotator and attachments manufacturer Engcon has reported net sales of SEK1.2 billion (US$115.6 million) for the first six months of 2023, up 22% on the previous year with profits for the period up 51% to SEK235 million (US$22.6 million).
In its recently published half-year financial report, the Sweden-based company said the increase had been primarily driven by an organic growth rate of 17%.
However, Engcon also saw its order intake for the period decline by 32%, from SEK1.1 billion (US$106 million) in 2022 to SEK749 million (US$72.1 million).
Krister Blomgren, Engcon CEO, said: “We find ourselves in a continued uncertain macroeconomic time, with high interest rates, inflation and general turbulence impacting the willingness to invest of our end customers. We are therefore seeing an expected reduction in order intake, particularly in the Nordic region and Europe, but even in other markets.
“The high penetration rate in the Nordic region means that we are even more dependent of developments in the construction and civil engineering industry and excavator sales.
“Dealers in the Nordic region and Europe have also built up inventories in previous quarters, which is further impacting order intake and sales. It is positive that certain parts of the European market are showing clear signs of recovery.”
Looking specifically at the second quarter of 2023, Engcon’s year-on-year orders received declined by 34%, coming in at SEK341 million (US$32.8 million) and its net sales decreased 5% to SEK508 million (US$48.9 million).
Despite this, the company still increased its profits for the three-month period by 5%, bringing in SEK86 million (US$8.28 million).
Krister said: “We are continuing to make long-term investments with a logistics hub in the US and the expansion of the production plant in Poland while we have intensified focus on cost control throughout the organisation.
“Our focus on end-customer profitability is particularly relevant in these times and in dialogue with our customers, we will be even more clearly highlighting the advantages of our products in the form of cost savings and increased profitability.
“Our global presence, business model and strong financial position are creating a solid platform for long-term and sustainable growth.”