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RCS - Deutz AG - DEUTZ earnings soar in the first quarter

Deutz AGAnnouncement

04/05/2023 09:30

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RNS Number : 4187Y Deutz AG 04 May 2023

DEUTZ AG / Key word(s): Quarter Results

DEUTZ AG: DEUTZ earnings soar in the first quarter of 2023

04.05.2023

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

· Adjusted EBIT more than doubles to €32.1 million year on year

· Free cash flow increases by €15.7 million to €10.8 million

· DEUTZ expects to reach the upper end of the guidance ranges for
2023

Cologne, May 4, 2023 - DEUTZ stayed the course for growth in the first
quarter of 2023: With an increase in unit sales of 10.6 percent 1 year on
year, the manufacturer of drive systems was able to grow revenues by 15.5
percent to €517.2 million. At the same time, with an increase in the
adjusted EBIT margin of 3.5 percent to 6.2 percent, profitability also
improved significantly. In light of the successful start to the year, the
Company already expects to achieve the upper end of the full-year 2023
guidance ranges issued in March.

"Our initiatives launched last year are increasingly paying off. Their
systematic implementation helped to improve the adjusted EBIT margin in the
Classic segment from 5.8 percent to 8.8 percent year on year. This is not only
a great success, it is also tremendously important to us. Because we can only
finance our green transformation through a profitable core business and the
expansion of our global service business. This is the basic idea behind our
'Dual+' strategy, with which we are positioning ourselves for the future,"
says DEUTZ CEO Dr Sebastian C. Schulte.

"We are also particularly pleased with our cash flow performance: The
operating cash flow grew by more than 200 percent to €31 million in the
first quarter, which means that we can report positive free cash flow of
€10.8 million. This underlines the Company's comfortable financial
position," adds DEUTZ CFO Timo Krutoff.

Aside from operational successes, DEUTZ also made further strategic progress:
DEUTZ closed the deal with Daimler Truck on March 29. As a result, with a 4.19
percent stake, Daimler Truck is now one of the Company's largest shareholders.
Moreover, DEUTZ has also further expanded its service network in the USA,
opening its ninth service center in Howell, Michigan.

Detailed first quarter 2023 key figures for the Group

New orders for the DEUTZ group amounted to €526.1 million in the first
quarter of 2023, an increase of 3.2 percent compared with the same period last
year. In regional terms, this trend was due to a significant increase in new
orders in the Americas, whereas new orders in the EMEA and Asia-Pacific
regions slightly declined. The application segments also presented a disparate
picture: While new orders increased significantly in Material Handling, the
Miscellaneous segment and the service business, the level of new orders in the
remaining application segments was lower year on year.

Orders on hand rose from €746.7 million in the prior-year period to €779.6
million as at March 31, 2023, indicating a stable order situation in the
coming months. Of that total, orders on hand attributable to the service
business amounted to €50.3 million (March 31, 2022: €43.8 million).

With a total of 55,333 units sold 2 , DEUTZ group registered an increase in
unit sales of 10.6 percent in the first quarter of 2023. Within this total,
the number of DEUTZ engines 3 sold rose by 5.9 percent to 46,110. The DEUTZ
subsidiary Torqeedo sold 9,223(2) units, which was 42.9 percent more than in
the prior-year period.

The uptrend in unit sales was driven by all regions. With an increase of 22.3
percent, the Asia-Pacific region showed the strongest growth, mainly due to
higher unit sales of electric boat drives. This is also reflected by the trend
in unit sales in the application segments. Aside from the Material Handling
segment, the increase in unit sales is exclusively attributable to the other
engines business, primarily the boat engines by Torqeedo.

Reflecting the growth in unit sales, DEUTZ revenues rose by 15.5 percent to
€517.2 million, driven by all regions and all application segments. The
stronger increase in revenue relative to unit sales resulted mainly from
market-oriented pricing in the Classic segment as well as from positive mix
effects.

Strong improvement in profitability

The EBIT before exceptional items (adjusted EBIT) improved significantly to
€32.1 million in the first quarter of 2023, after €15.8 million in the
prior-year period. Aside from the growth in the volume of business and the
associated economies of scale, this improvement was primarily attributable to
positive product mix effects and market-oriented pricing in the engine and
service business. However, the Group's adjusted EBIT was once again squeezed
by the loss reported by DEUTZ subsidiary Torqeedo, which has not yet managed
to break even. The EBIT margin before exceptional items also made a strong
year-on-year improvement, rising from 3.5 percent to 6.2 percent.

The EBIT for the period under review stood at €32.1 million (Q1 2022: €9.0
million). No exceptional items were reported in the first quarter of 2023,
whereas in the prior-year period, due to the recognition of provisions
following several changes at senior management level, exceptional items
amounted to €-6.8 million. The EBIT margin came to 6.2 percent, versus 2.0
percent in the same period last year.

The increase in adjusted EBIT meant that net income improved to €23.8
million from €6.8 million in the prior-year period. Accordingly, earnings
per share rose from €0.06 to €0.20 year on year.

Financial position remains comfortable

Cash flow from operating activities amounted to €31.0 million in the first
quarter of 2023, compared with €9.7 million in the prior-year period. This
increase was largely due to the positive earnings performance. As a result,
free cash flow amounted to €10.8 million, which is €15.7 million higher
than in the first quarter of 2022.

With an equity ratio of 45.0 percent at the end of March, the DEUTZ Group
still has a comfortable financial position.

Full-year guidance for 2023 specified

In line with the guidance published in mid-March, DEUTZ is forecasting unit
sales of between 175,000 and 195,000 DEUTZ engines for the full year 2023 4 ,
with a corresponding revenue increase to between €1.9 billion and €2.1
billion and an adjusted EBIT margin of 4.0 percent to 5.0 percent. In light
of the successful business performance in the first quarter, DEUTZ now expects
to achieve the upper end of these guidance ranges. The free cash flow before
M&A is still expected to be an amount in the mid-double-digit millions of
euros.

DEUTZ Group: Overview of key figures

€ million Q1 2023 Q1 2022 Change
New orders 526.1 509.6 3.2%
Group unit sales (units) 5 55,333 50,015 10.6%
thereof DEUTZ engines 6 46,110 43,561 5.9%
thereof Torqeedo(5) 9,223 6,454 42.9%
Revenue 517.2 447.9 15.5%
EBIT 32.1 9.0 256.7%
thereof exceptional items 0.0 -6.8 -
Adjusted EBIT (EBIT before exceptional items) 32.1 15.8 103.2%
EBIT margin (%) 6.2 2.0 +4.2pp
EBIT margin before exceptional items (%) 6.2 3.5 +2.7pp
Net income 23.8 6.8 250.0%
Net income before exceptional items 23.8 12.5 90.4%
Earnings per share (€) 0.20 0.06 233.3%
Earnings per share before exceptional items (€) 0.20 0.10 100.0%
Equity (Mar. 31/Dec. 31) 714.0 668.8 6.8%
Equity ratio (%) 45.0 45.3 -0.3pp
Cash flows from operating activities 31.0 9.7 219.6%
Free cash flow 10.8 -4.9 -
Net financial position (Mar 31/Dec. 31) -154.9 -164.2 5.7%
Employees 7 (Mar. 31) 5,029 4,805 4.7%

DEUTZ Classic segment: Overview of key figures

€ million Q1 2023 Q1 2022 Change
New orders 515.0 497.1 3.6%
Unit sales (units) 46,104 43,559 5.8%
Revenue 506.1 435.3 16.3%
Adjusted EBIT 44.4 25.4 74.8%
Adjusted EBIT margin 8.8 5.8 +3.0pp

DEUTZ Green segment: Overview of key figures

€ million Q1 2023 Q1 2022 Change
New orders 11.1 12.5 -11.2%
Unit sales 8 (units) 9,229 6,456 43.0%
Revenue 11.1 12.6 -11.9%
Adjusted EBIT -12.1 -9.6 -26.0%
Adjusted EBIT margin -109.0 -76.2 -32.8pp

The quarterly report is available at www.deutz.com/investor-relations
(http://www.deutz.com/investor-relations) .

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 (http://www.deutz.com) . The Company does
not undertake to update these forward-looking statements or to change them to
reflect future events or developments.

About DEUTZ AG

DEUTZ AG, a publicly traded company headquartered in Cologne, Germany, is one
of the world's leading manufacturers of innovative drive systems. Its core
competencies are the development, production, distribution, and servicing of
drive solutions in the power range up to 620 kW for off-highway applications.
The current portfolio extends from diesel, gas, and hydrogen engines to hybrid
and all-electric drives. DEUTZ drives are used in a wide range of applications
including construction equipment, agricultural machinery, material handling
equipment such as forklift trucks and lifting platforms, commercial vehicles,
rail vehicles, and boats used for private or commercial purposes. DEUTZ has
around 5,000 employees worldwide and almost 900 sales and service partners in
more than 130 countries. It generated revenue of more than €1.9 billion in
2022. Further information is available at www.deutz.com (http://www.deutz.com)
.

( 1 ) Since 2023, unit sales of Torqeedo include battery systems in addition
to electric boat drives (Q1 2023: approx. 1,800

units). A retrospective adjustment of the prior-year figure has not been
made.

( 2 ) Since 2023, unit sales of DEUTZ subsidiary Torqeedo include battery
systems in addition to electric boat drives

(Q1 2023: approx. 1,800 units). A retrospective adjustment of the
prior-year figure has not been made.

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

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

( 5 ) Since 2023, unit sales of DEUTZ subsidiary Torqeedo include battery
systems in addition to electric boat drives

(Q1 2023: approx. 1,800 units). A retrospective adjustment of the
prior-year figure has not been made.

( 6 ) Excluding electric boat drives of Torqeedo.

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

( 8 ) Torqeedo drives and other electric drives, hybrid-electric drives,
hydrogen drives, battery systems with a motor, DEUTZ PowerTree. In addition,
since 2023 unit sales of Torqeedo include battery systems (Q1 2023: approx.
1,800 units). A retrospective adjustment of the prior-year figure has not
been made.

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

04.05.2023 CET/CEST Dissemination of a Corporate News, transmitted by EQS News
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