RCS - Deutz AG - DEUTZ delivers robust performance

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30/04/2024 08:15

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RNS Number : 5653M  Deutz AG  30 April 2024

 DEUTZ AG / Key word(s): Quarter Results

DEUTZ delivers robust performance at the start of the new year - stable margin
 despite a fall in demand as a result of economic conditions

30.04.2024

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

PRESS RELEASE

 DEUTZ delivers robust performance at the start of the new year - stable margin
 despite a fall in demand as a result of economic conditions

 ·      Strategic and operational measures take effect in a challenging
 first quarter; revenue from continuing operations reaches €454.7 million in
 a difficult economic environment (down by 10.3 percent on Q1 2023)

 ·      Stable adjusted EBIT margin of 6.1 percent for continuing
 operations highlights the increasing robustness of the business even in a
 tough economic climate.

 ·      New orders remain below the level of the first quarter of the
 prior year, but well above the level of the previous quarter

 ·      Sale of Torqeedo completed and guidance for 2024 confirmed

 Cologne, April 30, 2024 - In the first quarter of 2024, in a market
 environment that remained challenging amid difficult economic conditions,
 DEUTZ AG maintained its profitability and confirmed its guidance. Although new
 orders from continuing operations decreased, as expected, by 18.7 percent
 compared with the prior-year quarter due to the weak economic climate and
 normalization effects, they were up by nearly 20 percent on the previous
 quarter. However, the year-on-year fall in revenue was much lower than the
 fall in unit sales and new orders. The positive and stable EBIT margin of 6.1
 percent for continuing operations bears out the Company's robust positioning.
 The corresponding adjusted EBIT figure, although down on the prior-year,
 remained comfortably in positive territory in the first quarter of 2024 at
 €27.7 million.

 "As is evident in our figures for the first quarter, the much weaker economic
 environment is starting to have an effect on us, too. The good news is that we
 are considerably more robust than before," says DEUTZ CEO, Dr. Sebastian C.
 Schulte. "This is the result of the operational measures that have already
 been taken as part of our new strategy including our growing service business.
 The restructuring of our portfolio is also helping to ensure that we are
 better able to withstand a difficult economic environment than we were in the
 past."

 After entering into an alliance with Daimler Truck last year, DEUTZ pressed
 ahead with the takeover - announced in December 2023 - of the sales and
 service activities of Rolls-Royce Power Systems that would give it access to
 the Daimler Truck engines. The relevant agreements were signed in the first
 quarter of 2024 and represent a further milestone in the implementation of
 DEUTZ's Dual+ strategy. The transaction, which is likely to be completed in
 summer 2024, is expected to generate additional annual revenue of around
 €300 million and an EBIT margin that is above the Group's current margin.

 Meanwhile, DEUTZ is forging ahead with the strategic realignment of the Green
 segment, which began in summer 2023. The sale of the Torqeedo Group, which had
 been announced in November 2023, with a buyer confirmed in January of this
 year, was completed soon after the end of the first-quarter reporting period
 on April 3, 2024. The proceeds of the sale, amounting to a figure in the high
 double-digit millions of euros, are expected to result in the recognition of a
 book gain in the low double-digit millions of euros in the second quarter of
 2024.

 The robust positioning of DEUTZ AG is also underlined by the latest figures
 for its financial position: "Our free cash flow for continuing operations
 remains in positive territory, although the difficult economic conditions have
 left their mark," explains CFO, Timo Krutoff.

 DEUTZ used the publication of the quarterly figures to confirm the guidance
 that it had issued previously. In 2024, on the basis of the continuing
 operations, the Company is expecting to achieve unit sales of between 160,000
 and 180,000 DEUTZ engines, revenue of €1.9 billion to €2.1 billion, an
 adjusted EBIT margin of between 5.0 percent and 6.5 percent, and free cash
 flow (before M&A activities) in the mid-double-digit millions of euros.
 Based on the Company's business performance in the first quarter of 2024, as
 described here, and on its anticipated performance going forward, DEUTZ is
 convinced that it is on track to meet these targets and therefore confirms its
 guidance.

 The Group's key figures for the first quarter of 2024 in detail

 (Note: Unless otherwise indicated, all the figures disclosed below are for
 continuing operations only.)

 New orders received by the DEUTZ Group in the first quarter of 2024 amounted
 to €419.2 million. This year-on-year decline of 18.7 percent reflects the
 aforementioned economic effects and the comparison with a strong prior-year
 quarter. The first quarter of 2023 had been substantially boosted by huge
 demand in the Material Handling application segment and in the Americas
 region. A positive factor for the reporting period was the stabilization of
 the service business, which registered slight growth in the first quarter of
 2024. Although DEUTZ's new orders decreased year on year, they were up by just
 over €68 million compared with the fourth quarter of 2023.

 Orders on hand amounted to €414.9 million as at March 31, 2024, compared
 with €772.5 million as at March 31, 2023 and €450.4 million as at December
 31, 2023.

 The DEUTZ Group's unit sales fell sharply in the first quarter of 2024 to
 38,242 engines sold (Q1 2023: 46,110). A positive exception was the Material
 Handling application segment, which - despite weaker demand in Asia-Pacific -
 saw strong growth in unit sales thanks mainly to an improvement in order
 activity among several major customers in the EMEA and Americas regions.

 DEUTZ's revenue decreased by 10.3 percent year on year to €454.7 million in
 the first quarter of 2024. However, the fall in revenue was significantly less
 pronounced than the fall in unit sales. In addition to the product mix, this
 primarily reflected pricing effects, for example as a result of the price
 adjustments that DEUTZ had been able to negotiate with customers in the
 preceding periods. With revenue of €125.9 million (up 3.8 percent year on
 year), the strategically important Service business was the most significant
 application segment in the first quarter of 2024 and is on track to achieve
 its target of generating annual revenue of around €600 million by 2025.

 Adjusted EBIT (EBIT before exceptional items) came to €27.7 million in the
 first quarter of 2024 (Q1 2023: €36.8 million).

 The equivalent figure for the DEUTZ Classic segment was €37.2 million (Q1
 2023: €44.4 million); the Green segment's adjusted EBIT amounted to a loss
 of €9.6 million (Q1 2023: loss of €7.4 million).

 The adjusted EBIT margin - despite the unfavorable revenue trend - fell only
 moderately by just over 1 percentage point to 6.1 per cent in the first
 quarter of 2024 (Q1 2023: 7.3 per cent).

 The decrease in EBIT resulted in net income from continuing operations falling
 year on year from €28.8 million to €16.5 million. In addition, DEUTZ
 incurred a net loss of €7.7 million from discontinued operations (Q1 2023:
 net loss of €5.0 million). Net income from continuing and discontinued
 operations ('entire Group') therefore amounted to €8.8 million (Q1 2023:
 €23.8 million). This brought earnings per share down year on year from
 €0.20 to €0.07 for the entire Group, or from €0.24 to €0.13 for
 continuing operations only.

 Cash flow from operating activities amounted to €26.2 million in the first
 quarter of 2024 (Q1 2023: €33.4 million). This decrease was mainly
 attributable to the year-on-year decline in earnings and the decrease in other
 liabilities, factors that were partially offset by the smaller rise in working
 capital compared with the first quarter of 2023.

 Cash flow from investing activities was almost unchanged compared to the
 previous year's figure (Q1 2023: € -16.9 million) with € -16.3 million in
 the first quarter of 2024. Cash flow from financing activities came to a net
 cash outflow of minus €24.7 million in the first quarter of 2024 due mainly
 to the repayment of loans.

 DEUTZ generated free cash flow of €5.1 million in the first quarter of 2024
 (Q1 2023: €14.3 million). There were no changes to this figure as a result
 of M&A activities in the first quarter of 2024.

 As at March 31, 2024, the DEUTZ Group's net financial debt had edged up by
 €8.5 million compared with the figure as at December 31, 2023 to €171.9
 million.

 The equity ratio for the entire Group improved from 46.7 percent as at
 December 31, 2023 to 47.3 percent as at March 31, 2024. The DEUTZ Group's
 financial position is therefore comfortable.

DEUTZ Group | Overview of key figures for continuing operations

 € million                                            Q1 2024      Q1 2023      Change
 New orders                                           419.2        515.8         -18.7 %
 Group unit sales                                     38,242       46,110        -17.1 %

(units)
 Revenue                                              454.7        507.0         -10.3 %
 EBIT                                                 23.8         36.8          -35.3 %
   thereof exceptional items                          -3.9         0.0          -
 Adjusted EBIT                                        27.7         36.8          -24.7 %

(EBIT before exceptional items)
 EBIT margin before exceptional items (%)              6.1          7.3          -1.2 pp
 Net income                                           16.5         28.8         -42,7%
 Net income before exceptional items                  19.8         28.8         -31,3%
 Earnings per share                                    0.13         0.24        -45,8%

(€)
 Earnings per share before exceptional items (€)       0.16         0.24        -33,3%
 Equity                                                752.8        743.2       +1,3%

(Mar. 31/Dec. 31)
 Equity ratio                                         47.3         46.7          0.6 pp

(%)
 Cash flow from operating activities                  26.2         33.4          -21.6 %
 Free cash flow                                       5.1          14.3          -64.3 %
 Net financial position                               -171.9       -163.4        -5.2 %

(Mar. 31/Dec. 31)
 Employees (Mar. 31) 1                                5,122        4,835        5,9%

 

DEUTZ Classic segment: Overview of key figures

 € million                                   Q1 2024    Q1 2023    Change
 New orders                                  418.3      515.0       -18.8 %
 Unit sales (units)                          38,054     46,104      -17.5 %
 Revenue                                     453.5      506.1       -10.4 %
 Adjusted EBIT                               37,2       44,4        -16.2 %

(EBIT before exceptional items)
 EBIT margin before exceptional items (%)    8,2        8,8         -0.6 pp

 

DEUTZ Green segment: Overview of key figures

 € million                                   Q1 2024    Q1 2023    Change
 New orders                                  0.9        0.8        12,5 %
 Unit sales (units) 2                        188        6           3033.3 %
 Revenue                                     1.2        0.9         33.3 %
 Adjusted EBIT                               -9.6       -7.4        -29.7 %

(EBIT before exceptional items)
 EBIT margin before exceptional items (%)    -800.0     -822.2      22.2 pp

 

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

 Upcoming financial dates

August 8, 2024: Interim report for the first half of 2024

November 7, 2024: Quarterly statement for the first to third quarter of 2024

 For further information on this press release, please contact:

 DEUTZ AG | Marc C. Schneider | Head of Investor Relations, Communications
 & Marketing

Tel. +49 (0) 221 822-3600 | Mark.Schneider@deutz.com

 DEUTZ AG | Jana Schildknecht | Junior Manager Investor Relations &
 ESG

Tel. +49 (0) 221 822-2492 | Jana.Schildknecht@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
 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 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
 over €2.1 billion in the 2023 financial year. Further information is
 available at www.deutz.com.

 ( 1 
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 ) Number of employees expressed in FTEs (full-time equivalents); excluding
 temporary workers.

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 ) Electric drives, hydrogen drives, battery systems with a motor, DEUTZ
 PowerTree.

30.04.2024 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

 

 DEUTZ Classic segment: Overview of key figures

 € million                                   Q1 2024    Q1 2023    Change
 New orders                                  418.3      515.0       -18.8 %
 Unit sales (units)                          38,054     46,104      -17.5 %
 Revenue                                     453.5      506.1       -10.4 %
 Adjusted EBIT                               37,2       44,4        -16.2 %

(EBIT before exceptional items)
 EBIT margin before exceptional items (%)    8,2        8,8         -0.6 pp

 

 DEUTZ Green segment: Overview of key figures

 € million                                   Q1 2024    Q1 2023    Change
 New orders                                  0.9        0.8        12,5 %
 Unit sales (units) 2                        188        6           3033.3 %
 Revenue                                     1.2        0.9         33.3 %
 Adjusted EBIT                               -9.6       -7.4        -29.7 %

(EBIT before exceptional items)
 EBIT margin before exceptional items (%)    -800.0     -822.2      22.2 pp

 

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

Upcoming financial dates

August 8, 2024: Interim report for the first half of 2024

November 7, 2024: Quarterly statement for the first to third quarter of 2024

For further information on this press release, please contact:

DEUTZ AG | Marc C. Schneider | Head of Investor Relations, Communications
& Marketing

Tel. +49 (0) 221 822-3600 | Mark.Schneider@deutz.com

DEUTZ AG | Jana Schildknecht | Junior Manager Investor Relations &
ESG

Tel. +49 (0) 221 822-2492 | Jana.Schildknecht@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
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 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
over €2.1 billion in the 2023 financial year. Further information is
available at www.deutz.com.

 

( 1 
(file:///C%3A/Users/wmueller/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/4C1MIUGW/1892275-1714455000-EN.html#_ftnref1)
) Number of employees expressed in FTEs (full-time equivalents); excluding
temporary workers.

( 2 
(file:///C%3A/Users/wmueller/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/4C1MIUGW/1892275-1714455000-EN.html#_ftnref2)
) Electric drives, hydrogen drives, battery systems with a motor, DEUTZ
PowerTree.

 

30.04.2024 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 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:  1892275

 

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