In the first quarter of 2014, DEUTZ built on its strong performance of the previous year, winning new orders amounting to €414.2 million in the first three months of the new year. As a result, new orders outstripped the same period last year by 6.6% (Q1 2013: €388.5 million). The Mobile Machinery application segment in particular reported a substantial rise in orders in the first three months of 2014. However, the company failed to achieve a repeat of the very high level of orders in the preceding quarter (€446.1 million) because the first quarter is traditionally relatively weak due to seasonal effects. New orders exceeded revenue by almost 21% in the quarter under review.
Compared with the corresponding period of 2013, there was a sharp rise in the number of engines sold, which increased by 22.7% to 44,457 (Q1 2013: 36,238). Unit sales were 9.9% higher in the fourth quarter of 2013, when 49,329 engines were sold. Revenue rose by 18.2% to €342.7 million in the first quarter of the year (Q1 2013: €289.9 million). All three regions – EMEA (Europe, Middle East and Africa), the Americas and Asia-Pacific reported increases, but revenue fell short of the figure of €410.1 million for the fourth quarter of 2013.
Thanks to a significant increase in the volume of business and improved income from investments accounted for using the equity method, operating profit (EBIT) also rose sharply. It amounted to €1.9 million, which was an improvement of €8.3 million on the operating loss of €6.4 million for the same period in 2013. The net loss of €0.6 million incurred for the first three months of 2014 represented an improvement of €6.3 million on the net loss of €6.9 million for the first quarter of 2013. Overall, there was a significant year-on-year improvement in all key financials. “The increase in our financial strength deserves to be highlighted. At the end of the quarter under review, our net financial debt stood at €35.5 million, an improvement of €33.8 million compared with the figure for
the first quarter of 2013,” notes DEUTZ CFO, Dr. Margarete Haase.
DEUTZ has decided to optimize its network of sites to further improve efficiency. Its Cologne sites are to be consolidated: within two years, the Cologne-Deutz site will have been vacated and a new shaft center for the production of camshafts and crankshafts set up at the company’s largest site in Cologne-Porz. Production of crankcases for the 2011 engine series is to be outsourced. The company has also undertaken not to make any compulsory redundancies in Cologne without the works council’s consent for a period of four years and to offer all apprentices a permanent position.
As part of the optimization strategy, the company is also examining the possibility of closing the exchange engine plant in Übersee on Lake Chiemsee and integrating it into the plant in Ulm. “Our task is to prepare DEUTZ for the future in the best way possible. This includes critically examining and further improving all costs and structures on a regular basis.” explains Dr Helmut Leube, chairman of the DEUTZ AG Board of Management. He adds, “We are confident that optimizing our network of sites will create long-lasting added value for DEUTZ.”
These measures will result in a one-off expense of between €15 million and €20 million in the current year. On the other hand, the company expects its operating profit to improve significantly from 2016 onwards and predicts that this improvement will be in excess of €10 million a year from 2017. Capital expenditure, particularly for the Cologne-Porz shaft center, will be around €20 million, but proceeds from the sale of real estate in subsequent years should significantly exceed this investment.
The company is forecasting encouraging revenue growth for the current year, helped by growth projects that have been initiated and the increasing proportion of total sales attributable to higher value engines that comply with the new emissions standards. Low double-digit revenue growth is
forecasted for 2014. The EBIT margin is predicted to exceed 4.0% before one-off items and 3.0% after the one-off items arising from the site optimizations mentioned above.
Detailed information on the first quarter of 2014 can be found in the enclosed summary of key performance indicators and at www.deutz.com.
