Deutz Reports 23.3% New Orders Increase During First Quarter 2017

Deutz recorded a 23.3% increase in new orders during the first quarter, increasing revenue 17.4% year-over-year, due to increases in its construction equipment, material handling and agricultural applications segments.

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Having announced preliminary results on April 27, 2017, DEUTZ AG has published its interim management statement for the first quarter of 2017. New orders rose significantly to reach €403.2 million, a 23.2% increase on the first 3 months of last year (Q1 2016: €327.3 million) and 23.6% more than in the previous quarter (Q4 2016: €326.1 million). At 37,153 engines, unit sales were up by 15.7% on both the prior-year period (Q1 2016: 32,112 engines) and the previous quarter (Q4 2016: 32,100 engines). Revenue for the first quarter of 2017 was €352.5 million, a year-on-year rise of 17.4% (Q1 2016: €300.2 million) and 12.0% higher than in the fourth quarter of last year (Q4 2016: €314.7 million). The largest region, EMEA (Europe, Middle East, Africa), saw strong revenue growth. Revenue also improved in the Americas region but declined slightly in the Asia-Pacific region. Broken down by application segment, revenue increased in the Construction Equipment, Material Handling and Agricultural Machinery applications segments whereas it decreased in the Automotive and Stationary Equipment application segments.

At €7.6 million, operating profit (EBIT before exceptional items) was on a par with the first quarter of last year. However, the figure for the prior-year period had been boosted by a contribution of €5.5 million from a licensing transaction in the DEUTZ Customised Solutions segment. Compared with the fourth quarter of 2016, EBIT before exceptional items went up by €3.9 million. The EBIT margin (before exceptional items) was 2.2% in the quarter under review. In the first quarter of 2017, the disposal of a building lease generated a positive exceptional item of €10.0 million. As a result, there was a marked increase in EBIT after exceptional items, which climbed to €17.6 million. Net income for the first 3 months of the current year advanced to €15.4 million, a year-on-year rise of €6.7 million (Q1 2016: €8.7 million). This resulted in earnings per share of €0.13 (Q1 2016: €0.08). Free cash flow also improved by a substantial €68.6 million to reach €39.7 million.

As the premises in Cologne-Deutz, which cover an area of around 160,000 sq. m, are no longer required following the site's relocation to Cologne-Porz, DEUTZ sold the land occupied by its former Cologne- Deutz site to the Düsseldorf-based project developer GERCHGROUP recently. The former industrial site, which is close to the Rhine, is to be redeveloped to create a new city district with a high proportion of housing. "We are very satisfied that we have sold the land occupied by our former Cologne-Deutz plant on attractive terms. By freeing up former industrial sites for alternative uses, we are contributing to Cologne's development, particularly with regard to the need for new housing within the city," comments Dr. Margarete Haase, Chief Financial Officer at DEUTZ.

DEUTZ expects to receive a sum of around €125 million as purchase consideration this year. Depending on completion of the ongoing planning process, DEUTZ anticipates a further, final instalment of the purchase consideration in the coming years. The exact amount is not yet known and, provided the planning application is successful, will reach into the mid double-digit million euros. In the current year DEUTZ expects this transaction to deliver a positive contribution to earnings in the high double-digit million euros (after taxes) that will be recognized as an exceptional item.

"We have made a successful start to 2017. New orders increased in all regions and application segments. The inflow of funds provided by the sale of the site opens up new opportunities for investing in our growth and the strengthening of our core business," says Dr. Frank Hiller, Chairman of the DEUTZ Board of Management. DEUTZ is reiterating its forecast for 2017 as a whole of a marked rise in revenue and a moderate increase in the EBIT margin before exceptional items. Substantial positive exceptional items are also expected.