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Good afternoon, everybody, and thanks for joining today's conference call of Wacker Neuson on behalf of the release of our results for the first 9 months of 2022 published this morning. My name is Ingo Middelmenne, and I just recently joined the Investor Relations team of Wacker Neuson as an interim manager for the time being. In the next 15 to 20 minutes, we will, in detail, present the most important events of Q3 and the first 9 months of 2022 from an operational and financial perspective, as well as the outlook for the year as a whole.
Following this, we will then find sufficient time for a Q&A session. If you are not able to follow today's call via the webcast, the presentation slides are also available for you for download at wackerneusongroup.com/investor-relations. Please note that the entire call, including the Q&A session will be recorded and made available publicly on our corporate website in the course of this day. I'm now handing you over to Dr. Karl Tragl, our CEO; and Christoph Burkhard, our CFO, who will lead you through today's call.
Thank you, Ingo, and welcome, everybody, to today's call from my side. Thank you all again for joining us today.
And also welcome from my side. This is Christoph Burkhard.
Ladies and gentlemen, despite generally difficult economic conditions, Wacker Neuson can look back on another successful quarter. Demand for our products remains high, which has ensured that our revenue increased by a strong 23% in the third quarter. All sales regions posted double-digit growth and contributed to this success. The positive trend in our profitability development continued as well. With a double-digit EBIT margin in quarter 3, we could increase our 9 months year-to-date margin to 8.8%. That's heading towards our target corridor of in between 9% and 10%.
But as you know, the general economic environment is currently deteriorating rather than improving. Supply chain problems still determine a large part of our day-to-day business, and we currently have to work much harder just to keep material supply as it is. We could pass on price increases to our customers better than at the beginning of the year. However, we still have a significant shortage of parts we need for our products, which ultimately prevents us from delivering machines and this way increases the stock of work in progress.
In order to deliver, we decided to keep up our inventories at a higher level, so that we can actually take advantage of business opportunities for further growth in the coming months. As a logical consequence, we see our free cash flow deteriorating in quarter 3, and Christoph will explain in a minute how we expect further development towards year-end. As already mentioned, Wacker Neuson continues to perform well in all sales regions and customer demand for our products remains high. Thus, our order book has continued to grow and now reaches well into the second half of next year 2023.
This is particularly important for us to compensate for the uncertainties in our business environment and to give us planning stability for the coming quarters. In Europe, our sales increased by 14% in the third quarter. Once again, growth was driven by the major construction equipment markets, Germany, France and United Kingdom. Poland also performed very well. And our agricultural brands, Kramer and Weidemann performed above average, increasing their sales by more than 25%.
Our growth path in the Americas also remains fully on track. Here, growth in quarter 3 was 54%, with U.S. and Canada even performing extraordinarily better. But there's also no question that the U.S. dollar development contributed to this outperformance. Adjusted for currency effects, growth was still 34%. Demand in North America is largely driven by Worksite technology and compaction product groups as well as compact equipment, in particular, compact track loaders and excavators. This region further increased its share in group sales and is now contributing a good 20% of our revenues.
Asia Pacific expanded sales also by almost 50% in the past quarter. Adjusted for currency effects, this figure was just under 35% in quarter 3. This region currently accounts for 4% of our group sales. And here too, the growth trends in our most important single market in the region, Australia stays fully on track. Despite the still weak domestic Chinese market, our operations in China and their role as our export hub are serving attractive markets in South America and Africa with very competitive products.
Last but not least, the post-merger integration of our latest addition to our group of the Enar Group is going well and the company is also following our general growth path.
So Christoph, what is about macroeconomic factors influencing our business?
Well Karl, looking at the current macro factors provides us with a mixed picture. The overall supply chain situation continues to be complex and complicated. We are still dealing with a big degree of planning uncertainty reflected in the supply chain disruption chart. As an example, we have been talking throughout this year about the comparably high number of unfinished machines parking on our yards, just waiting for 1 or 2 missing components. In order to reverse this trend and to increase the completion and hence the delivery rate for our machines, we, as a consequence from the still disrupted supply chains, have deliberately been accepting a temporarily higher net working capital.
At the end of Q3, it stood at 33.5%. But as mentioned, with the reduction of unfinished machines kicking in, in Q4 and the seasonal reduction of receivables towards year-end, we expect to reduce net working capital again. The second important macro factor I would like to look at is the development of input costs. When looking at the example of container rates, we do see falling rates, albeit still being on high levels. So input cost inflation is currently slowing down, which is a positive signal, but at the same time, the preparedness of the market to accept further product price increases is reaching its limits. So overall, the current balancing act between net working capital reduction targets, profitability aspects and overall risk mitigation is continuing.
Karl just explained how we are currently managing our net working capital in the context of the overall environment. And logically, this has an impact on free cash flow, which stands year-to-date at minus EUR 150 million. And I will talk in a minute about how we see further development towards the end. So despite the challenging environment and all the impact factors I've been talking about, our net debt in Q3 was still at EUR 254 million, translating into a leverage ratio and the net debt divided by EBITDA of below 1 is playing a conservative level. And this is being complemented by our continuously high equity ratio of almost 60%.
Let us now turn to the outlook for the full year. As mentioned, our teams are fully focusing on the reduction of unfinished machines towards the end in order to further convert our big order book into deliveries and to fulfill customer demand. This, amongst others, will again reduce our working capital and improve our free cash flow. And despite the difficult macroeconomic environment, we do see further stable development of our revenues until year-end, leading us to the upper end of our guidance. And finally, as you know, we narrowed our earnings guidance for the full year, Karl mentioned it, to the range between 9% and 10%, and we expect to get into the range.
So Karl will now share with us some fresh and really meaningful insights from the world's biggest fair for construction equipment.
So thanks, Christoph. Let me talk about the recent highlights, as Christoph mentioned, at the bauma 2022, which is the world's leading trade fair for construction equipment, mining equipment, construction vehicles and light equipment. We at Wacker Neuson once again presented exciting innovations in machinery, electronics and in software. And some of you also visited us on site at our Capital Markets Day, which took place on the 25th of October as part of the trade fair. As you can see on the slide, we presented new products from our zero emission line, such as the first battery-powered reversible plate with a direct electrical drive.
We displayed a mobile power bank for construction sites. Both innovations show that this will raise the bar in the market to accept electric construction equipment. We also presented an innovation in the classic construction machinery segment, our so-called EW100 wheeled excavator. This machine, a fully software-controlled excavator, set new standards in terms of performance, safety and comfort for driver, considerably ahead of just about every other wheeled excavator on the market in this segment. And just to add, because we were the first to be on the show, this was really very well accepted by many customers. As you see, Wacker Neuson remains true to its claim of technology and innovation leadership in the market.
Another topic I would like to talk about is our Battery One Alliance. With Battery One, we had introduced a battery compatible with the construction equipment of a variety of manufacturers. Wacker Neuson, BOMAG, Mikasa, Swepac and Enarco will be offering in the future compatible interchangeable batteries and chargers for handheld construction equipment under the new Battery One brand. The availability of an interchangeable battery for light equipment used by several manufacturers is key to speed up the acceptance of electric mobility on construction sites. With Battery One rechargeable batteries, we are making it much easier for customers to switch to electrically powered products in the future. Pioneering battery technology is our key enabler for driving the development of sustainable products with high customer benefits. Customer focus, technology and innovation is very important. But ultimately, at the end of the day, customer satisfaction is decided, if something goes wrong, by the competence of service personnel and availability of spare parts. To further increase our aftermarket supply capability, we recently celebrated the building completion of a new spare parts logistics center in Mülheim-Kärlich. Together with the real estate developer, we are creating a new logistics center on 55,000 square meters for our global spare parts supply to go live in the course of next year.
The logistics center will comply with the latest sustainability standards of the German Sustainable Building Council, and will also receive a platinum certification. This way, the Wacker Neuson Group is securing sustainable and future-proof storage capacity at a central location in Europe fit for future growth. Approximately 130 employees will be working on sites. And in addition to storing around 100,000 spare parts for light and compact equipment for all our brands, Wacker Neuson Kramer and Weidemann, the new site will also offer additional services to optimize customer support.
Operations will be handled by logistics experts through the whole market. Thanks to an excellent strategic location between Cologne Bonn and Frankfurt Airport as well as state-of-the-art warehouse automation, we will excel our service performance this way to the next level. The presented bulk of product highlights, the strategic importance of the Battery One alliance, and our new logistics center in Mülheim-Kärlich represent further milestones in implementing our strategy.
Thank you, Karl and Christoph, for your detailed presentation. Operator, I'm now handing this over to you to explain the Q&A procedure.
[Operator Instructions] The first question is from the line of Tore Fangmann with Berenberg.
Could you maybe give us some more color on the revenue guidance here. I know the upper end is at EUR 2.1 billion. And after the first 9 months, we are already at EUR 1.6 billion, a little bit over even. And would you say the scope for guidance increased maybe?
Thanks for the question, Tore. It's very understandable question. The reason why we are still hesitant to go beyond the upper end of our guidance, this is simply -- in seasonal patterns, usually, December is not a strong month due to Christmas break, plant closures, cleaning up actions, et cetera. So again, as I mentioned, we are convinced that we will get to the upper end, but we would not like to extend it now beyond because, again, there are a few seasonal factors in Q4 that basically could lead to the results that we have mentioned, but the trend is fully okay. Thanks for the question.
Okay. One very quick follow-up on this. For the last 10 years, Q4 was always higher than Q3 in revenues. So for me, it looked like the seasonal trend would be the other way around.
Okay. We would still be a bit cautious here. But I mean, looking at the EUR 1.6 billion to the EUR 2.1 billion, it's still a way to go. And in case we should exceed a little bit, then of course this is very welcome.
The next question is from the line of Alexander Galitsa with HAIB.
I have first question on the rental business strategy. Could you explain how you're managing or what your strategy in general is? And it seems that the secondary market for used equipment currently benefits from favorable pricing. I was just wondering whether it makes sense from your perspective to take advantage of it and maybe sell out some of your fleet that you have, which has actually expanded quite a bit over...
Okay. So let me talk a little bit about our rental business. First of all, we have rental business running for sales clusters where we have owned sales locations. So it's only part of our business. But it is an important part of that, and it's a growing business which we are doing. And there we have different ways how to do it. So there are systems like customers can rent and test the machine and take it over later on. And they can really rent it and give it back and we rent it to another customers. So this is a sales tool in very different ways how we can do that. And as I said, it is a constant business.
To get the balance in between should we deliver a machine to a new customer or should we deliver a machine to fill up our rental fleet is a day-to-day tricky discussion we are doing in each of the locations, because we want to keep the balance. We want to keep it up in order to sell new machines, but we also want to keep up to grow our fleet, so that we can, in the future, grow also with the rental margin business.
Your second question on used machines, I'm not clear which direction you're heading there, because we don't do any secondary markets. We just do sell machines out of our rental fleet after a rental contract.
And the customer would be then the exact customer who was renting the machine? Or how does that work?
Primarily, the machines are for rental and for, as I said, as a second step then to the same customer to be sold out. I have to be honest, what happens to a machine which is not in rental use at the moment and where a customer would really like to buy it, that's a case I would have to check it, because it has a lot to do with capitalization of machines and everything. But our main focus is really on rent a machine, get money out of that. And as a second step, use it as a sales tool for customers to test machines and take it in later on.
Okay. Understood. And then my second question is on the gross profit margin. So as we go into fourth quarter, do you expect that the effect from higher selling prices will exceed the sort of negative effects that you might see from plant closures during holidays, so that you could see sequential improvement year-on-year. If you could comment on that.
If I have understood you right here, so it's about not only closing the gap, but basically reversing it even, right, in a sense that price increases would basically exceed the input cost inflation, that our price increases on the supply side, if I understand you correctly, right?
Yes. Well, ultimately, what I mean is that whether one can expect Q4 gross profit margin to be higher than Q3 based on both the fact that you have the stronger effect from higher selling prices, which is obviously one and against the negative effect of you having lower productivity in the plants into the quarters. That matter of fact will be still positive quarter-over-quarter.
No, we believe that this would be too optimistic.
So I would just like to add that because we have basically -- the counter effects for price increases is material cost increase, but a second one is rework and inefficiencies and underutilization. So if you want to talk about compensating, price increases is working against both of those effects. And in the book, again, you're right, the price implementation will quarter-by-quarter increase. But on the other hand, the fourth quarter, as Christoph said, with lower days of work in December and lower plant utilization in the end of the year is also adding to this impact of underutilization, rework, inefficiencies. The background for Christoph saying that we do not expect for that reason an increase in the profitability in quarter 4.
[Operator Instructions] There are no further questions at this time. I will now hand back over to Mr. Ingo Middelmenne for closing comments.
Thank you, operator. Of course, should any further questions arise, please do not hesitate to contact us. We're always happy to provide you with the information needed. So we've reached the end of today's call. Thanks again for joining, and have a great day. Bye-bye.