RCS - Deutz AG - 9 Month figures

Deutz AGAnnouncement

09/11/2022 08:30

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RNS Number : 8078F  Deutz AG  09 November 2022

 DEUTZ AG / Key word(s): 9 Month figures

DEUTZ AG: DEUTZ completes a successful nine-month period and publishes
 full-year guidance for 2022

09.11.2022 / 07:30 CET/CEST

The issuer is solely responsible for the content of this announcement.

·      Orders on hand rise to around €830 million

 ·      Revenue increases by 19 percent to almost €1.4 billion

 ·      Adjusted EBIT margin improves to 4.7 percent

 Following a successful first half of the year, DEUTZ continued to generate
 growth and recorded double-digit increases in unit sales and revenue in the
 nine-month period. The war in Ukraine did not have a material adverse effect
 on business performance. However, as for other companies, the impact of the
 war on energy and raw material prices and on the global flow of goods around
 the world is very tangible for DEUTZ.

 "Exceptionally high price increases across the board, combined with
 disruptions to supply chains, are taking their toll on the economy as a whole.
 Nonetheless, we raised our adjusted EBIT margin by 2.1 percentage points to
 4.7 percent. This is proof positive that the performance initiatives that we
 have launched and our greater focus on maintaining cost discipline are
 increasingly paying off. This uptrend is encouraging but offers no room for
 complacency because we still have a long way to go before we achieve our
 targeted profitability level," says CEO Dr. Sebastian C. Schulte. DEUTZ
 defined a range of measures under its Powering Progress strategy program that
 are aimed at facilitating the Company's transition to alternative drive
 systems and new business models and boosting its commercial performance. They
 include passing on higher costs to customers in the short term through
 multiple rounds of price rises. This will increasingly mitigate the impact of
 these higher costs.

 Looking to the future, Schulte adds: "Our orders on hand stood at the very
 high level of approximately €830 million at the end of September. That
 provides a stable starting position for the coming months. Market demand
 remains particularly strong for engines with a capacity of less than four
 liters. At the same time, our book-to-bill ratio of 0.95 in the third quarter
 indicates that market growth is gradually slowing down. However, we have set a
 course that will make DEUTZ more resilient in periods of economic weakness."

 As well as delivering a positive operating performance and successfully
 launching its first performance initiatives, DEUTZ made further progress with
 implementing its hydrogen strategy and joined the HyCET (Hydrogen Combustion
 Engine Trucks) research project consortium. HyCET aims to demonstrate the
 sustainability potential of trucks with hydrogen combustion engines in
 transportation logistics. As part of the project, two 18-tonne trucks will be
 developed and fitted with DEUTZ TCG 7.8 H2 hydrogen engines. The trucks will
 then be put through their paces by using them in the regular logistics
 operations of the BMW Group and DEUTZ. The four-year research project has a
 total investment volume of €19.5 million, of which €11.3 million will be
 funded by the German Federal Ministry for Digital and Transport (BMDV).

 Furthermore, the Supervisory Board of DEUTZ AG has completed the
 reorganization of the Board of Management: Dr.-Ing. Petra Mayer took up her
 post as the new Chief Operating Officer (COO) at the start of November, while
 Timo Krutoff will join the Board of Management as the new CFO and Labor
 Director on December 1.

 New orders close to the prior-year level, sharp rise in unit sales and revenue

 In the first three quarters of 2022, new orders received by the DEUTZ Group
 amounted to €1,519.7 million. This was around the same high level of
 €1,514.0 million achieved in the prior-year period, which had been boosted
 by one-off effects of spending brought forward in an amount of more than
 €100 million.

 The regional situation was mixed, with new orders rising markedly in the
 Americas and Asia-Pacific regions but declining slightly in the EMEA region
 during the reporting period. The application segments also presented a
 disparate picture. Whereas Material Handling, Agricultural Machinery,
 Stationary Equipment, and the service business generated increases in new
 orders (with some of them reporting double-digit percentage growth), there
 were significant year-on-year decreases for Construction Equipment and
 Miscellaneous.

 Orders on hand continued to climb, advancing by 13.4 percent to reach a
 substantial €828.8 million as at September 30, 2022 (September 30, 2021:
 €616.4 million). This points to a stable order situation in the months
 ahead. Of that total, orders on hand attributable to the service business rose
 by 62.7 percent to €53.2 million (September 30, 2021: €32.7 million).

 With a total of 169,352 units sold, the DEUTZ Group registered an increase in
 unit sales of 16.5 percent in the reporting period. Within this total, the
 number of DEUTZ engines 1  sold rose by 12.6 percent to 130,875. The DEUTZ
 subsidiary Torqeedo sold 38,477 electric boat drives, which was 32.3 percent
 more than in the prior-year period.

 The uptrend in unit sales was generated across all application segments. The
 region with the sharpest increase was the Americas, where the rise of
 48.5 percent was primarily attributable to higher unit sales of electric boat
 drives. The EMEA region, which is DEUTZ's largest sales market, saw its unit
 sales climb by 10.8 percent.

 Reflecting the growth in unit sales, DEUTZ's revenue swelled by 19.0 percent
 to €1,395.8 million in the period under review. All regions and all of the
 main application segments recorded increases in revenue. The revenue of the
 service business grew to €336.2 million, accounting for around 25 percent
 of consolidated revenue. Within this business, parts sales and DEUTZ Xchange
 performed particularly well.

 Strong improvement in profitability

 EBIT before exceptional items (adjusted EBIT) improved from €30.9 million
 to €65.9 million in the period under review and thereby more than doubled.
 This improvement was attributable to the growth in the volume of business, the
 associated economies of scale, cost-saving measures, and positive currency
 effects. Moreover, the impact of additional costs stemming from persistent
 supply bottlenecks and higher materials prices is being increasingly mitigated
 thanks to these costs being passed on to our customers through price
 increases. The growth of research and development expenditure, higher
 procurement costs, and the losses generated by the DEUTZ subsidiary Torqeedo
 were more than offset by the aforementioned earnings drivers. The adjusted
 EBIT margin also increased significantly year on year, rising from
 2.6 percent to 4.7 percent. In the high-revenue Classic segment, which
 encompasses all activities related to the development, production,
 distribution, and maintenance of diesel and gas engines as well as the related
 service business, the adjusted EBIT margin improved from 4.0 percent to
 6.9 percent. As expected, the adjusted EBIT margin of the Green segment,
 which includes not only the DEUTZ subsidiary Torqeedo but also all activities
 related to new drives (such as hydrogen engines), decreased on the back of
 high levels of capital expenditure on research and development, falling to
 minus 51 percent.

 The increase in adjusted EBIT meant that net income before exceptional items
 improved by 94.8 percent to €52.2 million in the reporting period,
 resulting in earnings per share before exceptional items of €0.43 (Q1-Q3
 2021: €0.22).

 Financial position remains comfortable

 Cash flow from operating activities amounted to a net cash outflow of
 €13.8 million in the first nine months of 2022, compared with a net cash
 inflow of €67.9 million in the prior-year period. This decline was largely
 attributable to the rise in working capital. The growth in the volume of
 business and delays in the supply chain led to a rise in inventories,
 especially finished goods and work in progress. Moreover, the procurement of
 certain items in the market was extremely challenging, which resulted in a
 build-up of inventories of materials and components in order to safeguard
 production. The growth of inventories was only partly offset by the net cash
 inflow resulting from higher trade payables.

 As a result of the decrease in cash flow from operating activities, free cash
 flow amounted to minus €69.8 million. This equated to a deterioration of
 €85.0 million compared with the first three quarters of 2021.

 The equity ratio stood at 42.6 percent, compared with 45.6 percent at the
 end of 2021. The DEUTZ Group's financial position therefore remains
 comfortable.

 Full-year guidance for 2022 published

 Given the considerable geopolitical uncertainties, DEUTZ stated that the
 guidance for 2022 published in its 2021 annual report was under review. 2 
 Based on its business performance in the first to third quarter, DEUTZ is now
 forecasting unit sales of between 175,000 and 185,000 DEUTZ engines 3  for
 2022. This should result in an increase in revenue to between €1.75 billion
 and €1.85 billion. The adjusted EBIT margin is likely to be in a range of
 4.5 percent to 5.0 percent. Despite this encouraging earnings guidance, free
 cash flow is expected to be a negative amount in the low- to mid-double-digit
 millions of euros. The main reasons for this are the build-up of inventories
 in order to safeguard production and delays in the supply chain.

 DEUTZ Group: Overview of key figures

€ million                                          Q1-Q3    Q1-Q3    Change   Q3      Q3      Change

 
 2022
 2021

 2022
 2021

 New orders                                         1,519.7  1,514.0  0.4%     442.1   485.2   -8.9%
 Group unit sales (units)                           169,352  145,359  16.5%    60,611  51,732  17.2%
   thereof DEUTZ engines 4                          130,875  116,273  12.6%    40,413  40,842  -1.1%
   thereof Torqeedo                                 38,477   29,086   32.3%    20,198  10,890  85.5%
 Revenue                                            1,395.8  1,173.4  19.0%    465.4   403.2   15.4%
 EBIT                                               57.4     27.8     106.5%   21.9    11.7    87.2%
   thereof exceptional items                        -8.5     -3.1     174.2%   -1.4    -2.4    -41.7%
 Adjusted EBIT (EBIT before exceptional items)      65.9     30.9     113.3%   23.3    14.1    65.2%

 EBIT margin (%)                                    4.1      2.4      +1.7pp   4.7     2.9     +1.8pp
 EBIT margin before exceptional items (%)           4.7      2.6      +2.1pp   5.0     3.5     +1.5pp
 Net income                                         45.1     23.7     90.3%    17.1    10.4    64.4%
 Net income before exceptional items                52.2     26.8     94.8%    18.2    12.8    42.2%
 Earnings per share (€)                             0.37     0.20     85.0%    0.14    0.09    55.6%
 Earnings per share before exceptional items (€)    0.43     0.22     95.5%    0.15    0.10    50.0%
 Equity (Sep. 30/Dec. 31)                           642.9    588.4    9.3%
 Equity ratio (%)                                   42.6     45.6     -3.0pp
 Cash flow from operating activities                -13.8    67.9     -        -28.4   23.2    -

 Free cash flow                                     -69.8    15.2     -        -45.1   5.5     -
 Net financial position                             -217.7   -79.7    -173.1%

(Sep. 30/Dec. 31)
 Employees 5  (Sep. 30)                             4,995    4,701    6.3%

The quarterly statement for the first to third quarter of 2022 is available on
 our website at www.deutz.com/en/investor-relations
 (http://www.deutz.com/investor-relations) .

 Contact

 DEUTZ AG / Christian Ludwig / SVP Communications & Investor Relations

 Tel: +49 (0)221 822 3600 / Email: Christian.Ludwig@deutz.com

 DEUTZ AG / Svenja Deißler / Senior Manager Investor Relations & ESG

 Tel: +49 (0)221 822 2491 / Email: Svenja.Deissler@deutz.com

 Forward-looking statements

 This press release may contain certain forward-looking statements based on
 current assumptions and forecasts made by the DEUTZ management team. Various
 known and unknown risks, uncertainties, and other factors may lead to material
 differences between the actual results, the financial position, or the
 performance of the DEUTZ Group and the estimates and assessments set out here.
 These factors include those that DEUTZ has described in published reports,
 which are available at www.deutz.com. The Company does not undertake to update
 these forward-looking statements or to change them to reflect future events or
 developments.

 

 ( 1 ) Excluding electric boat drives from DEUTZ subsidiary Torqeedo.

 ( 2 ) See the press release dated March 14, 2022.

 ( 3 ) Excluding electric boat drives from DEUTZ subsidiary Torqeedo.

 ( 4 ) Excluding electric boat drives from DEUTZ subsidiary Torqeedo.

 ( 5 ) Number of employees expressed in FTEs (full-time equivalents); excluding
 temporary workers.

09.11.2022 CET/CEST Dissemination of a Corporate News, transmitted by EQS News
 - a service of EQS Group AG.

The issuer is solely responsible for the content of this announcement.

The EQS Distribution Services include Regulatory Announcements,
 Financial/Corporate News and Press Releases.

Archive at www.eqs-news.com

The quarterly statement for the first to third quarter of 2022 is available on
our website at www.deutz.com/en/investor-relations
(http://www.deutz.com/investor-relations) .

Contact

DEUTZ AG / Christian Ludwig / SVP Communications & Investor Relations

Tel: +49 (0)221 822 3600 / Email: Christian.Ludwig@deutz.com

DEUTZ AG / Svenja Deißler / Senior Manager Investor Relations & ESG

Tel: +49 (0)221 822 2491 / Email: Svenja.Deissler@deutz.com

Forward-looking statements

This press release may contain certain forward-looking statements based on
current assumptions and forecasts made by the DEUTZ management team. Various
known and unknown risks, uncertainties, and other factors may lead to material
differences between the actual results, the financial position, or the
performance of the DEUTZ Group and the estimates and assessments set out here.
These factors include those that DEUTZ has described in published reports,
which are available at www.deutz.com. The Company does not undertake to update
these forward-looking statements or to change them to reflect future events or
developments.

 

( 1 ) Excluding electric boat drives from DEUTZ subsidiary Torqeedo.

( 2 ) See the press release dated March 14, 2022.

( 3 ) Excluding electric boat drives from DEUTZ subsidiary Torqeedo.

( 4 ) Excluding electric boat drives from DEUTZ subsidiary Torqeedo.

( 5 ) Number of employees expressed in FTEs (full-time equivalents); excluding
temporary workers.

 

09.11.2022 CET/CEST Dissemination of a Corporate News, transmitted by EQS News
- a service of EQS Group AG.

The issuer is solely responsible for the content of this announcement.

The EQS Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.

Archive at www.eqs-news.com

 Language:     English
 Company:      DEUTZ AG
               Ottostraße 1
               51149 Köln (Porz-Eil)
               Germany
 Phone:        +49 (0)221 822 0
 Fax:          +49 (0)221 822 3525
 E-mail:       ir@deutz.com
 Internet:     www.deutz.com
 ISIN:         DE0006305006
 WKN:          630500
 Indices:      SDAX
 Listed:       Regulated Market in Dusseldorf, Frankfurt (Prime Standard); Regulated
               Unofficial Market in Berlin, Hamburg, Hanover, Munich, Stuttgart, Tradegate
               Exchange
 EQS News ID:  1482403

 

 End of News  EQS News Service

 

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