RCS - Deutz AG - DEUTZ updates its growth strategy

Deutz AGAnnouncement

08/10/2024 10:45

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RNS Number : 3579H  Deutz AG  08 October 2024

 DEUTZ AG / Key word(s): Capital Markets Day

DEUTZ updates its growth strategy and reduces costs sustainably

08.10.2024 /

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

DEUTZ updates its growth strategy and reduces costs sustainably

 ·      Greater diversification for more profitable growth and a more
 resilient setup

 ·      Further strategic development of the portfolio with the new
 Solutions segment

 ·      Revenue target of €4.0 billion by 2030, new mid-term targets
 defined

 ·      Cost program with sustainable savings of €50 million set up

 Cologne, October 8, 2024 - At its Capital Markets Day in Cologne today, DEUTZ
 presented an update of its Dual+ strategy and announced a cost-cutting program
 to counter the cyclically-induced decline in demand.

 The core of the strategic development is a stronger diversification of the
 portfolio and a demand-oriented approach to alternative drives. DEUTZ is thus
 continuing the path it embarked on two years ago with its Dual+ strategy and
 building on the milestones it has achieved so far. These include initial steps
 towards market consolidation in the business with conventional combustion
 engines, major advances in the growth of the service business, and a
 realignment of the green portfolio.

 "With our new segment Solutions, we will position ourselves much more strongly
 as a solution provider along the value chains we are familiar with - to grow
 profitably with relevant products and to make DEUTZ more resilient overall. At
 the same time, we see considerable potential for further profitable expansion
 of our business with classic combustion engines and in the service business,"
 explains DEUTZ CEO Dr. Sebastian C. Schulte.

 In the new segment Solutions, DEUTZ combines not only alternative drives but
 also businesses that go beyond the production and servicing of engines and are
 in markets in which DEUTZ masters technology and service. In the New
 Technology segment (formerly Green), the portfolio will be even more
 market-oriented and focused on the range of e-products and hydrogen combustion
 engines. The Energy segment, built up by the acquisition of Blue Star Power
 Systems, is expected to grow to over €500 million in revenue by 2030. DEUTZ
 acquired the US generator sets manufacturer this summer, positioning itself as
 a solution provider in the rapidly growing energy market.

 Overall, DEUTZ is targeting revenue growth to around €4.0 billion by 2030.
 The Solutions segment is expected to grow at a compound annual growth rate
 (CAGR) of 30 percent by 2030. In addition to the expected revenue in the
 Energy business, the New Technologies business is expected to grow to more
 than €300 million - in both areas organically and inorganically. In 2030,
 the business with conventional combustion engines is expected to contribute
 around half of the revenue at €2.2 billion. The service business will
 contribute around 25 percent of revenue, with an even higher contribution to
 earnings. The level of ambition is reflected in the newly set mid-term
 targets: By 2028, revenue is expected to be between €3.2 and 3.4 billion,
 with an adjusted EBIT margin of 8 to 9 percent. The shareholders should
 benefit from this in the form of an increasing, but at least stable, dividend.

 In the business with conventional internal combustion engines (Classic),
 market consolidation will continue and will primarily include areas of
 application that continue to rely on combustion technology. DEUTZ will
 continue to play an active role here to position itself more cost-effectively
 and to tap into further markets. Production will become more flexible through
 collaborations such as the partnership with the Indian TAFE Group.

 In the high-margin service business, revenue is expected to grow to €1.0
 billion by 2030. This will be achieved through targeted acquisitions in
 regions that have not yet been sufficiently developed and through better
 utilization of the existing service offering. This includes expanding the
 locations and branching out into new business models, such as smart and
 digitalized service offerings.

 In addition to the further development of its Dual+ strategy, DEUTZ this week
 announced a cost-cutting program in response to the persistently difficult
 economic situation. In order to counter the cyclically induced decline in
 demand, costs are to be sustainably reduced by €50 million by the end of
 2026. This cost program complements the short-term measures already initiated,
 which are expected to yield an effect of €10 to 15 million in Q4. These
 include, among other things, making production more flexible and introducing
 short time working.

 "The result of our performance and, in particular, our portfolio measures over
 the last two years is that we are making money even in these difficult times.
 However, the current situation shows that additional structural measures are
 needed to successfully position ourselves for the future. These will include
 structural changes and thus job cuts. We will do all this in close
 consultation with the employee representatives," explains Oliver Neu, Chief
 Financial Officer and Labor Director of DEUTZ AG.

 For further information on this press release, please contact:

Mark Schneider

Head of Investor Relations, Communications & Marketing

Tel: +49 (0)221 822 3600

Email: Mark.Schneider@deutz.com (mailto:Mark.Schneider@deutz.com)

 

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
 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, stationary equipment
 such as generator sets (gensets) as well as commercial and rail vehicles. With
 over 5,000 employees worldwide and around 1,000 sales and service partners in
 more than 120 countries, DEUTZ generated revenue of around €2.1 billion in
 the 2023 financial year. Further information is available at www.deutz.com
 (http://www.deutz.com) .

08.10.2024 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

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
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, stationary equipment
such as generator sets (gensets) as well as commercial and rail vehicles. With
over 5,000 employees worldwide and around 1,000 sales and service partners in
more than 120 countries, DEUTZ generated revenue of around €2.1 billion in
the 2023 financial year. Further information is available at www.deutz.com
(http://www.deutz.com) .

 

08.10.2024 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 2491
 Fax:          +49 (0)221 822 3525
 E-mail:       svenja.deissler@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:  2004255

 

 

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