Deutz sees signs of recovery in Q3 performance

Off road engine manufacturer Deutz has reported an overall positive business performance and significant improvement in operating profit in the third quarter, compared with Q2 2020.
Ancillary Equipment / November 11, 2020
By Liam McLoughlin
 Deutz CEO Frank Hiller says the company expects to see a recovery in its main sales markets in the coming months
Deutz CEO Frank Hiller says the company expects to see a recovery in its main sales markets in the coming months

In contrast to the sharp decline in Deutz’s engine business in the first nine months of 2020, the sales figures for the third quarter of 2020 were higher overall than those for the second quarter of the year. As a result, operating profit (EBIT before exceptional items) improved significantly compared with the previous quarter.

New orders increased significantly in Q3 by 16.1% on the preceding quarter to €310m, driven by all application segments with the exception of Stationary Equipment. Unit sales were up by 2.7% to 34,700, thanks to double digit percentage increases in Material Handling and Agricultural Machinery. Revenue across all regions increased by 10% to €308.2m.

Against this revenue was down across all regions in the first three quarters of the year from €1,379.9m in Q1-3 2019 to €928.2m in Q1-3 2020. Deutz said the first three quarters of 2020 saw a significant overall decline in the sales figures of its Compact Engines and Customised Solutions segments due to coronavirus.

The company added that the sharp overall decline in business performance in the first nine months of 2020 was due partly to the macroeconomic effects of the coronavirus crisis, which in an already challenging market environment made customers in various industries much less willing to invest and thus triggered a collapse in demand. In addition performance in the first nine months was also particularly affected by the fact that customers were continuing to run down the inventories of engines they had built up before new emissions standards came into force. Business operations were also disrupted during the period as a result of a temporary production shutdown in April 2020 because of coronavirus.

Deutz CEO Dr. Frank Hiller commented: “In line with our Vision of Success 2020 programme, which we set out at the beginning of the year, we remain focused on pursuing our strategic growth initiatives despite the coronavirus pandemic and its economic implications. Over the coming months, we expect to see a recovery in our main sales markets. From a current perspective, however, it appears likely that they will need a long time to return to their pre-crisis levels."

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