Further strong growth at DEUTZ

  • Significant rise in new orders
  • Double-digit increase in revenue and significantly improved EBIT margin
  • DEUTZ focuses efforts on growth in China
  • Implementation of E-DEUTZ strategy continues to gather momentum

DEUTZ AG has today published its consolidated financial results for the first three quarters of 2018. New orders rose from €1,173.8 million to €1,548.7 million, an increase of 31.9 per cent. In the third quarter of 2018, new orders were up by 22.0 per cent to €452.2 million (Q3 2017: €370.8 million).

The unit sales figure for the nine-month period was 156,504 engines, including 8,977 electric motors sold under the Torqeedo brand. This equates to an increase of 32.3 per cent compared with unit sales in the prior-year period (Q1–Q3 2017: 118,279 engines). Revenue advanced from €1,093.2 million to €1,297.3 million, a rise of 18.7 per cent. In the third quarter, revenue was up by a substantial 17.0 per cent to €419.7 million (Q3 2017: €358.7 million).

Operating profit (EBIT before exceptional items) amounted to €45.9 million in the first three quarters of the year (Q1–Q3 2017 €26.7 million). Adjusted for effects on earnings in connection with the DEUTZ Dalian joint venture, it stood at €60.3 million. Operating profit thus improved at a significantly faster rate than revenue, despite the strike at one of the Company’s suppliers. Consequently, the EBIT margin (before exceptional items) improved to 4.6 per cent after adjusting for the temporary drag on earnings resulting from DEUTZ Dalian and to 3.5 per cent before adjustment for this drag on earnings (Q1–Q3 2017: 2.4 per cent). In the third quarter of 2018, the EBIT margin was 3.0 per cent (Q3 2017: 1.4 per cent).

“The strike at a supplier put a great deal of strain on management and staff at our Company,” says the Chairman of the DEUTZ Board of Management, Dr Ing Frank Hiller. “This makes our substantial revenue growth, to which all regions and segments contributed, and our significant increase in operating profit all the more pleasing. We took further important steps that are aimed at securing growth in the future. We have also succeeded in further expanding our licensing business in China and are making good progress with the implementation of our EDEUTZ strategy.”

In the Chinese market, DEUTZ plans to generally reorganise its presence so that it can generate stronger growth and be even more successful there. As previously announced, DEUTZ signed contracts for the sale of the former DEUTZ Dalian joint venture to its former partner FAW in October 2018. The Company is also currently in talks about entering into new alliances with major local partners in the construction equipment and agricultural machinery industries.

Our E-DEUTZ strategy, introduced in 2017, is continuing to gather momentum. Demonstrating fully working operational systems during the ELECTRIP Event Week was the best way to prove our expertise in this field. An interdisciplinary team of Torqeedo and DEUTZ design engineers succeeded in integrating our drive concept into two prototype machines in just six months. This shows that DEUTZ has mastered the technology and is in a position to supply marketable electrification solutions.

For 2018 as a whole, DEUTZ (assuming no further supply shortage) expects revenue to rise sharply to more than €1.6 billion. The EBIT margin (before exceptional items) is forecast to improve to at least 4.5 per cent.

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DEUTZ AG: Saarbrücken Regional Court orders Neue Halberg Guss GmbH to resume supply to DEUTZ AG immediately

Resounding success for DEUTZ in injunction proceedings Dr Frank Hiller, Chairman of the Board of Management: "The madness has come to an end." Planning certainty for employees and customers of DEUTZ AG.

At the request of DEUTZ AG, the Saarbrücken Regional Court today ruled that Neue Halberg Guss GmbH (NHG) must resume supplying cast parts to DEUTZ AG as contractually agreed with immediate effect. The decision, issued in the form of a mandatory injunction Leistungsverfügung, provides DEUTZ AG with security of supply in respect of crankcases and cylinder heads. The injunction is initially valid until the end of the year. Should it be necessary in the future, DEUTZ AG will not hesitate to use all legal means at its disposal to ensure it is able to maintain a reliable supply to its customers.

"The madness has come to an end. NHG will finally have to meet its commitments. This is a breakthrough for DEUTZ AG and our customers," said Dr Frank Hiller, Chairman of the Board of Management of DEUTZ AG, welcoming the decision. "We now have planning certainty – that’s the most important thing."

DEUTZ AG felt it had no option but to apply for an interim injunction when NHG, its partner of many years, demanded significant price increases, one-off payments amounting to millions of euros and firm purchase commitments in return for continuing to supply the parts, even though a valid contract was still in force and there was no legal basis for making such demands.

The court’s decision confirms our view that contracts must be honoured and, in a globalised world, suppliers must assume a special responsibility," commented Dr Frank Hiller.

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