RCS - Deutz AG - Significant growth of new orders

Deutz AGAnnouncement

10/11/2021 08:05

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RNS Number : 9170R  Deutz AG  10 November 2021

 DEUTZ AG / Key word(s): Quarterly / Interim Statement/Miscellaneous

DEUTZ AG: DEUTZ sees significant growth of new orders

10.11.2021

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

 ·      Double-digit percentage increases in unit sales and revenue

 ·      EBIT margin before exceptional items rises to 2.6 percent in the
 nine-month period

 ·      Further milestones reached with the sustainability strategy

 Cologne, November 10, 2021 - DEUTZ generated further growth in the third
 quarter of 2021, building on its success in the first half of the year. New
 orders climbed by 56.5 percent to €485.2 million on the back of continued
 strong demand in all of the main application segments. While unit sales jumped
 by 49.1 percent to 51,732 engines, revenue advanced by 30.8 percent to
 €403.2 million. EBIT before exceptional items improved to an operating
 profit of €14.1 million, compared with an operating loss of €15.7 million
 in the prior-year quarter. The book-to-bill ratio stood at 1.29 at the end of
 the nine-month period.

 "We build the cleanest and most efficient engines for our customers. The sharp
 rise in unit sales shows that the market has confidence in our innovative
 drive technologies. As we move toward green off-highway drive solutions, we
 are stepping up our focus on hydrogen, electric, and e-fuels. This is the only
 way that we can achieve the Paris climate targets," says DEUTZ CEO Dr. Frank
 Hiller.

 As well as a healthy operating performance, DEUTZ reached further strategic
 milestones. In August, the Company unveiled its first market-ready hydrogen
 engine. DEUTZ plans to go into full production with the TCG 7.8 H2 in 2024.
 The first pilot project gets under way with utility company RheinEnergie at
 the start of 2022 and will involve using the TCG 7.8 H2 in combination with a
 generator to produce electricity. "What we are achieving here on a relatively
 small scale is delivering insights into the decentralized, sustainable, and
 greenhouse-gas-free supply of energy in urban centers," explains Hiller.

 DEUTZ had already signed a cooperation agreement with the German Aerospace
 Center (DLR) regarding a joint project focused on making construction sites
 more environmentally friendly. The aim of the project is to develop solutions
 for running construction-site vehicles and agricultural machinery on hydrogen.
 DEUTZ is also improving the environmental footprint of its engines for the EU
 Stage V emissions standard. For example, it approved its entire TCD engine
 portfolio for use with paraffinic diesel fuels at the end of August.

 Double-digit percentage increases in new orders, unit sales, and revenue

New orders received by DEUTZ amounted to €1,514.0 million in the first three
 quarters of 2021, an increase of 62.2 percent compared with the prior-year
 period, which had been heavily affected by coronavirus. This growth can be
 explained by the fact that customers across all application segments and
 regions continued to be very willing to invest. The exceptionally strong rise
 was also attributable to one-off effects of spending brought forward in June
 and September, which amounted to more than €100 million. This situation came
 about mainly because of customer orders being brought forward in response to
 longer lead times resulting from global material shortages and logistics
 bottlenecks and also in view of price adjustments.

 As at September 30, 2021, orders on hand totaled €616.4 million, which was
 up by 146.2 percent year on year.

 With a total of 145,359 engines sold, the DEUTZ Group registered an increase
 in unit sales of 33.9 percent in the reporting period. The number of DEUTZ
 engines( 1 ) sold rose by 37.6 percent to 116,273. The DEUTZ subsidiary
 Torqeedo sold 29,086 electric boat drives, which was 20.9 percent more than in
 the first three quarters of 2020. Almost all application segments saw big
 increases in unit sales. Only Stationary Equipment fell short of the level in
 the prior-year period due to a decrease in unit sales of gensets. The EMEA
 region, which is currently DEUTZ's largest sales market, saw the sharpest rise
 in absolute terms. Unit sales in this region climbed by 35.2 percent.

 Reflecting the growth in unit sales, DEUTZ generated consolidated revenue of
 €1,173.4 million in the period under review. All application segments
 contributed to this year-on-year growth of 26.4 percent. The lower rise in
 revenue, relative to the rise in unit sales, was mainly the result of the
 disproportionately sharp increase in demand for engines with a capacity of
 less than 4 liters. Service revenue swelled by 16.2 percent to €298.4
 million, primarily due to the substantial growth of business from parts sales.
 This means that the revenue target of around €400 million for the service
 business in 2021 is in reach.

 All regions contributed to the increase in revenue with double-digit
 percentage growth rates. The German sales market saw a particularly sharp rise
 of 32.4 percent. In China, the most important sales market for the regional
 growth strategy, DEUTZ advanced its revenue by 32.8 percent compared with the
 prior-year period to reach €116.9 million.

 Further rise in profitability; efficiency program is paying off

EBIT before exceptional items (operating profit/loss) improved markedly from a
 loss of €65.6 million in the prior-year period to a profit of €30.9
 million in the first three quarters of 2021. This improvement was mainly
 attributable to the growth in the volume of business and the associated
 economies of scale. Earnings were further boosted by the increasingly
 noticeable effect of cost savings resulting from the restructuring process.
 Similarly, the EBIT margin before exceptional items made a strong year-on-year
 improvement from minus 7.1 percent to plus 2.6 percent.

 EBIT for the period under review stood at €27.8 million (Q1-Q3 2020: loss of
 €103.4 million). This figure takes account of exceptional items amounting to
 an expense of €3.1 million that related to the efficiency program initiated
 at the start of 2020. The EBIT margin came to 2.4 percent (Q1-Q3 2020: minus
 11.1 percent).

 The increase in operating profit meant that the Company generated net income
 of €23.7 million, compared with a net loss of €104.5 million in the
 prior-year period. As a result, earnings per share increased from minus
 €0.86 to plus €0.20.

Net income before exceptional items stood at €26.8 million in the reporting
 period; earnings per share before exceptional items came to €0.22.

 Positive free cash flow and a comfortable financial position

Compared with the prior-year period, when cash flow had been weakened by the
 pandemic, cash flow from operating activities improved from a net outflow of
 €19.4 million to a net inflow of €67.9 million. This was predominantly due
 to the improvement in operating profit combined with more rigorous management
 of working capital across the Group, especially with regard to receivables and
 liabilities. As a result of the improvement in cash flow from operating
 activities and the reduction in investing activities, free cash flow was up by
 €94.0 million year on year to €15.2 million.

 Reflecting these changes in cash flow, net financial debt was slightly lower
 than at the end of 2020. It amounted to €83.1 million as at September 30,
 2021 (December 31, 2020: €83.8 million).

 "Our efficiency program and the cost savings achieved are increasingly paying
 off," says DEUTZ CFO Dr. Sebastian C. Schulte, commenting on the DEUTZ Group's
 financial position. "This can be seen from our earnings performance and
 improvement in cash flow." At the beginning of September, in light of its
 improved business situation, DEUTZ ended the €150 million credit line that
 had been granted to it with the assistance of Germany's KfW development bank.
 The term of this COVID-19 tranche had been due to finish in November 2021. In
 addition to the existing syndicated loan of €160 million with a term until
 June 2024, DEUTZ has also secured bilateral credit lines totaling €75
 million from three banks for a duration of 18 months. "We have unused credit
 lines of €200 million at our disposal. This gives us sufficient financial
 headroom to be able to restructure the funding of our current and future
 growth projects and put it on a secure long-term footing," adds Schulte. The
 Company's equity ratio remains at a comfortable level at 45.0 percent.

 Confirmation of raised full-year guidance for 2021

It can be assumed that global problems with the supply of input materials will
 continue to weigh on business performance and that supply issues for certain
 components will persist. Nevertheless, DEUTZ confirms its full-year guidance,
 which it raised in September, in view of its healthy business performance in
 the reporting period and the sustained upward trajectory of the industries in
 which the Company's customers operate.( 2 ) It now expects unit sales of
 155,000 to 170,000 DEUTZ engines( 3 ) in 2021, which should result in an
 increase in revenue to between €1.6 billion and €1.7 billion. Service
 revenue is forecast to account for around €400 million of the total revenue
 figure. The anticipated increase in unit sales and revenue and the realization
 of further potential cost savings indicate that the EBIT margin before
 exceptional items is likely to be in a range of 2.0 percent to 3.0 percent.
 This is based on the assumption that the ongoing difficulties with the supply
 of components will not worsen significantly in the coming weeks. Reflecting
 the improved operating performance, DEUTZ is aiming for free cash flow to be
 neutral.

DEUTZ Group: overview of key figures

€ million                                              Q1-Q3 2021  Q1-Q3 2020  Change   Q3 2021  Q3 2020  Change
 New orders                                             1,514.0     933.6       62.2%    485.2    310.0    56.5%
 Group unit sales (units)                               145,359     108,559     33.9%    51,732   34,700   49.1%
 thereof DEUTZ engines( 4 )                             116,273     84,502      37.6%    40,842   26,887   51.9%
 thereof Torqeedo                                       29,086      24,057      20.9%    10,890   7,813    39.4%
 Revenue                                                1,173.4     928.2       26.4%    403.2    308.2    30.8%
 EBIT                                                   27.8        -103.4      -        11.7     -53.5    -
 thereof exceptional items                              -3.1        -37.8       91.8%    -2.4     -37.8    93.7%
 Operating profit/loss (EBIT before exceptional items)  30.9        -65.6       -        14.1     -15.7    -
 EBIT margin (%)                                        2.4         -11.1       +13.5pp  2.9      -17.4    +20.3pp
 EBIT margin before exceptional items (%)               2.6         -7.1        +9.7pp   3.5      -5.1     +8.6pp
 Net income                                             23.7        -104.5      -        10.4     -52.2    -
 Net income before exceptional items                    26.8        -68.3       -        12.8     -16.0    -
 Earnings per share (€)                                 0.20        -0.86       -        0.09     -0.43    -
 Earnings per share before exceptional items (€)        0.22        -0.57       -        0.10     -0.14    -
 Equity (Sep. 30/Dec. 31)                               567.1       535.2       4.7%     567.1    535.2    4.7%
 Equity ratio (%)                                       45.0        45.3        -0.3pp   45.0     45.3     -0.3pp
 Cash flow from operating activities                    67.9        -19.4       -        23.2     24.3     -4.5%
 Free cash flow                                         15.2        -78.8       -        5.5      6.9      -20.3%
 Net financial position (Sep. 30/Dec. 31)               -83.1       -83.8       0.8%     -83.1    -83.8    0.8%
 Employees( 5 )( )(Sep. 30)                             4,701       4,575       2.8%     4,701    4,575    2.8%

The full quarterly statement is available at
 https://www.deutz.com/investor-relations
 (https://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 / 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.

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

( 2 ) See the ad hoc disclosure dated September 13, 2021.

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

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

( 5 ) FTEs, excluding temporary workers.

 10.11.2021 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 full quarterly statement is available at
https://www.deutz.com/investor-relations
(https://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 / 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.

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

( 2 ) See the ad hoc disclosure dated September 13, 2021.

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

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

( 5 ) FTEs, excluding temporary workers.

 

 

10.11.2021 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:  1247661

 

 

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