RCS - Deutz AG - Further growth in first quarter of 2022

Deutz AGAnnouncement

05/05/2022 08:15

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RNS Number : 4277K  Deutz AG  05 May 2022

 DEUTZ AG / Key word(s): Quarter Results/Miscellaneous

DEUTZ AG: DEUTZ generates further growth in first quarter of 2022

05.05.2022

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

 ·      Rise in orders on hand to around €750 million

 ·      Significant improvement in adjusted EBIT

 ·      New revenue target defined for the profitable service business:
 €500 million by 2025

 ·      Restructuring of the Group's funding

 Cologne, May 5, 2022 - DEUTZ, one of the world's leading manufacturers of
 innovative drive systems for off-highway applications, can look back on a
 highly promising start to 2022 despite the outbreak of war in Ukraine.

 "With revenue rising by around 30 percent, our adjusted EBIT margin increased
 by 3.3 percentage points compared with the prior-year quarter to reach 3.5
 percent. Now we need to sustain and accelerate this uptrend. We will
 resolutely implement further measures aimed at boosting our profitability,"
 says CEO Dr. Sebastian C. Schulte. Turning to the year ahead, he adds: "Our
 orders on hand climbed to around three-quarters of a billion euros at the end
 of March. That provides a stable starting position for the coming months.
 However, the supply situation remains challenging. At the same time, the
 geopolitical impact of the war in Ukraine creates a lot of uncertainty,
 including for DEUTZ. Our forecast is therefore still subject to change."

 DEUTZ also made progress from a strategic perspective in the first few months
 of this year. It has initiated a multi-phase strategy process aimed at
 increasing its profitability and unlocking potential for growth. The first
 targets have been defined: revision of the pricing structure for the new
 engine business, optimization of the engine portfolio, and accelerated
 expansion of the profitable service business. The aim is to increase service
 revenue to €500 million by 2025 as a result of organic growth and through
 acquisitions. Two acquisitions have already taken place: At the start of May,
 DEUTZ acquired its former service partners AUSMA Motorenrevisie B.V., which is
 headquartered in Roden, Netherlands, and South Coast Diesels, based in Naas,
 Ireland. The two companies sell and service diesel engines in their home
 markets, where they operate as multi-brand dealers. As well as improved market
 penetration, the acquisitions will enable DEUTZ to expand its service business
 in these countries to include competitors' engines.

 Marked rise in new orders; double-digit increases in unit sales and revenue

In the first quarter of 2022, new orders received by DEUTZ increased by 9.6
 percent year on year to €509.6 million. All regions contributed to this
 growth.

 Orders on hand continued to climb, reaching a substantial €746.7 million as
 at March 31, 2022 (March 31, 2021: €394.3 million). This points to a stable
 order situation in the months ahead. The proportion of orders on hand
 attributable to the service business stood at €43.8 million (March 31, 2021:
 €31.8 million).

 With a total of 50,015 units sold, the DEUTZ Group registered an increase in
 unit sales of 30.3 percent in the first three months of 2022. The number of
 DEUTZ engines( 1 ) sold rose by 35.1 percent to 43,561. The DEUTZ subsidiary
 Torqeedo sold 6,454 electric boat drives, which was 5.2 percent more than in
 the first quarter of 2021. The growth in unit sales was driven by all
 application segments and by DEUTZ's two most important sales markets, EMEA and
 the Americas.

 Reflecting the growth in unit sales, DEUTZ's revenue swelled by 30.4 percent
 to €447.9 million in the period under review. As was the case for unit
 sales, all application segments contributed to this increase. From a regional
 perspective too, the trend was positive across the board.

 Strong improvement in profitability

EBIT before exceptional items (adjusted EBIT) improved significantly to
 €15.8 million in the first quarter of 2022, compared with €0.8 million in
 the prior-year period. This rise was mainly attributable to growth in the
 volume of business, economies of scale, and the effects of cost-saving
 measures. Higher research and development expenditure and increased
 procurement costs were more than offset by the positive impact of the revenue
 growth. Moreover, it is becoming increasingly possible to gradually pass on
 rising costs for raw materials and logistics to customers. 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 0.2 percent to 3.5 percent.

 EBIT for the period under review stood at €9.0 million (Q1 2021: €0.4
 million). This figure takes account of exceptional items amounting to an
 expense of €6.8 million that related to the recognition of provisions
 following several changes at senior management level. The EBIT margin came to
 2.0 percent (Q1 2021: 0.1 percent).

 Due to the increase in adjusted EBIT, net income improved by €7.7 million to
 €6.8 million. As a result, earnings per share increased from minus €0.01
 to plus €0.06. Net income before exceptional items amounted to €12.5
 million; earnings per share before exceptional items came to €0.10.

 Financial position remains comfortable; restructuring of the Group's funding

Cash flow from operating activities amounted to €9.7 million in the first
 quarter of 2022 (Q1 2021: €17.1 million). The reduction was predominantly
 due to the change in working capital and an increase in inventories that
 became necessary due to the significant expansion in the volume of business.
 This outweighed the significant improvement in operating profit. As a result
 of the decrease in cash flow from operating activities, free cash flow
 amounted to minus €4.9 million. This equated to a small deterioration
 compared with the figure for the prior-year period of minus €1.7 million.

 As a result of drawing down an existing credit line in an amount of €25
 million in the first quarter of 2022, net financial debt swelled by €7.0
 million to €86.7 million as at March 31, 2022.

 The equity ratio stood at 45.0 percent, compared with 45.6 percent at the end
 of 2021. The DEUTZ Group's financial position therefore remains very
 comfortable. As at March 31, 2022, the Company had unutilized credit lines
 totaling around €185 million at its disposal.

 DEUTZ restructured its existing funding at the start of May 2022. This
 involved increasing the volume of the long-term syndicated loan from €160
 million to €250 million and terminating the three existing short-term
 bilateral credit lines, which had a total volume of €75 million. The new
 lending arrangements include an ESG component and better overall terms and
 conditions. The term of the syndicated loan was extended by three years to
 2027. DEUTZ has thus once again expanded the financial means at its disposal
 for investment in its transformation and for growth by acquisition.

 Guidance for 2022 still subject to change due to high levels of uncertainty

Although the DEUTZ Group made a highly promising start to the year, it is
 unclear how the ongoing war in Ukraine and its consequences will affect
 DEUTZ's engine business going forward. DEUTZ's business in Russia, Belarus,
 and Ukraine had previously been generating annual revenue of around €20
 million and is therefore relatively modest in terms of its size. Moreover,
 DEUTZ has no branches in Ukraine or Belarus and also no direct suppliers based
 in the crisis regions. Nevertheless, the geopolitical impact of the war on the
 global economy, on its flow of goods, and on the supply of energy brings with
 it a great deal of uncertainty for DEUTZ. For this reason, the guidance
 published in the 2021 annual report for the full 2022 financial year continues
 to be subject to change. DEUTZ has discontinued all new engine business with
 Russia and Belarus until further notice.

 DEUTZ Group: Overview of key figures

€ million                                          Q1 2022  Q1 2021  Change
 New orders                                         509.6    464.8    9.6%
 Group unit sales (units)                           50,015   38,384   30.3%
 thereof DEUTZ engines( 2 )                         43,561   32,249   35.1%
 thereof Torqeedo                                   6,454    6,135    5.2%
 Revenue                                            447.9    343.4    30.4%
 EBIT                                               9.0      0.4      > +1,000%
 thereof exceptional items                          -6.8     -0.4     > +1,000%
 Adjusted EBIT                                      15.8     0.8      > +1,000%

(EBIT before exceptional items)
 EBIT margin (%)                                    2.0      0.1      +1.9pp
 EBIT margin before exceptional items (%)           3.5      0.2      +3.3pp
 Net income                                         6.8      -0.9     -
 Net income before exceptional items                12.5     -0.5     -
 Earnings per share (€)                             0.06     -0.01    -
 Earnings per share before exceptional items (€)    0.10     0.00     -
 Equity (Mar. 31/Dec. 31)                           601.3    588.4    2.2%
 Equity ratio (%)                                   45.0     45.6     -0.6pp
 Cash flow from operating activities                9.7      17.1     -43.3%
 Free cash flow                                     -4.9     -1.7     -188.2%
 Net financial position (Mar. 31/Dec. 31)           -86.7    -79.7    -8.8%
 Employees( 3 )( )(Mar. 31)                         4,805    4,548    5.7%

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

 Upcoming financial dates

August 11, 2022: Interim report for the first half of 2022

November 10, 2022: Quarterly statement for the first to third quarter of 2022

 Contact

DEUTZ AG / Christian Ludwig / SVP Communications & Investor Relations

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

 DEUTZ AG / Svenja Deißler / Investor Relations

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.

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 4,750 employees worldwide and over 800 sales and service partners in
 more than 130 countries. It generated revenue of around €1.6 billion in
 2021. Further information is available at www.deutz.com
 (http://www.deutz.com/) .

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

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

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

 05.05.2022 Dissemination of a Corporate News, transmitted by DGAP - a service
 of EQS Group AG.

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

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

Archive at www.dgap.de

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

Upcoming financial dates

August 11, 2022: Interim report for the first half of 2022

November 10, 2022: Quarterly statement for the first to third quarter of 2022

Contact

DEUTZ AG / Christian Ludwig / SVP Communications & Investor Relations

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

DEUTZ AG / Svenja Deißler / Investor Relations

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.

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 4,750 employees worldwide and over 800 sales and service partners in
more than 130 countries. It generated revenue of around €1.6 billion in
2021. Further information is available at www.deutz.com
(http://www.deutz.com/) .

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

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

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

 

 

05.05.2022 Dissemination of a Corporate News, transmitted by DGAP - a service
of EQS Group AG.

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

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

Archive at www.dgap.de

 

 

 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:  1344081

 

 

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