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09 November 2017

Deutz delivering financial strength

First publishedon www.WorldHighways.com

German engine firm Deutz is reporting strong financial performance for the first nine months of 2017. The latest results reveal a marked increase in new orders, revenue and EBIT and a significant improvement in free cash flow. The firm also believes it is well positioned for the future as its E-Deutz strategy has been accelerated by the recent acquisition of Torqeedo.

The firm says that new orders rose by 25.5% to reach €1,173.8 million, compared with €935.3 million for the same period in 2016. In the third quarter of 2017, new orders came to €370.8 million, an increase of 43.7% compared with last year's figure of €258.1 million.

The number of engines sold climbed by 17.8% to 118,279 in the first nine months of 2017 compared with 100,439 engines for the same period in 2016. Unit sales in the third quarter of 2017 totalled 38,680 engines, which was 25.9% more than the 30,733 units in the prior-year period. Revenue rose by 15.6% to €1.0932 billion in the nine-month period compared with €945.5 million for the first three quarters of 2016.

The largest region, Europe, Middle East, Africa (EMEA), saw revenue grow by 18.7%, while revenue in the Americas region was up by 13.9%. Revenue in the Asia-Pacific region was on a par with the corresponding period of 2016, in which the first quarter had been boosted by licensing income. Revenue for the third quarter of 2017 amounted to €358.7 million, a year-on-year increase of 19.1% from the €301.1 million in the same period in 2016.

Operating profit (EBIT before exceptional items) improved by €8.1 million compared with the first nine months of 2016, reaching €27.8 million. The EBIT margin (before exceptional items) widened from 2.1% to 2.5%. At €21.3 million, net income for the first three quarters of 2017 was €2.5 million higher than the €18.8 million in the corresponding period of 2016.

"In 2017, we are benefiting from a broad and sustained brightening of the market environment. We are strategically investing the proceeds from the sale of the land at the former Cologne-Deutz site in innovation, service and internationalisation," said Deutz's chief financial officer, Dr Margarete Haase.

"The E-Deutz strategy is putting us on the right path to becoming the leading provider of innovative drive systems," said Dr Frank Hiller, Chairman of the DEUTZ Board of Management. "The acquisition of Torqeedo is the critical catalyst for our electrification strategy. It gives us an extensive portfolio of expertise and technology in all relevant areas of drive electrification. We will fully exploit this technological edge over our competitors."

For 2017 as a whole, DEUTZ is reiterating its forecast of a marked rise in revenue and a moderate year-on-year increase in the EBIT margin (before exceptional items).

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