DEUTZ Presents Results for 2016

DEUTZ new orders in 2016 rose 2.9% compared to the previous year; the company anticipates the market will be stagnate in 2017 though there have been signs of potential improvement.

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DEUTZ AG has announced its consolidated financial results for 2016. New orders amounted to €1,261.4 million, up by 2.9% on the prior-year figure of €1,225.9 million. The level of new orders rose in the Construction Equipment, Material Handling and Agricultural Machinery application segments, and in the service business. For the purposes of reporting, the former Mobile Machinery application segment has been divided into the Construction Equipment and Material Handling application segments, providing greater transparency in terms of the significance of various customer industries.

In total, 132,539 engines were sold, representing a drop of 3.8% compared to last year's figure of 137,781 engines. The Stationary Equipment and Automotive application segments, in particular, reported fewer engine sales. Revenue amounted to €1,260.2 million, up by 1.0% on the figure of €1,247.4 million reported a year earlier. Broken down by region, revenue was up by 3.3% in the EMEA (Europe, Middle East and Africa) region and by 15.9% in the Asia-Pacific region, but down by 13.0% in the Americas.

Operating profit (EBIT) rose by €18.5 million to €23.4 million in 2016. The EBIT margin improved to reach 1.9%, compared with 0.4% the year before. Net income increased from €3.5 million in 2015 to €16.0 million, which resulted in earnings per share of €0.14 compared with €0.04 for the same period of the previous year. “We have seen earnings improve on the back of lower material costs and depreciation and amortization. We have also benefited from the first positive effects of optimizing our site network in 2016. These measures are well advanced and will deliver a positive contribution to earnings of around €10 million in 2017 – and an even higher contribution in future years as capacity utilization rises,” says Dr. Margarete Haase, CFO at DEUTZ.

The equity ratio saw further growth from 45.5-46.3%. Free cash flow dropped from €35.0 million to €4.7 million compared to the previous year, due to changes in working capital. The Board of Management and Supervisory Board will propose to the Annual General Meeting that an unchanged dividend of €0.07 per share be paid.

Dr. Frank Hiller was appointed as a member of the Board of Management and its chairman with effect from January 1, 2017. “We want to work together with our customers in stable, long-term partnerships and offer them assured and innovative technologies. Our objective is to further strengthen our market position and our commercial success and thus make ourselves more attractive to our customers and the capital markets,” says Dr. Hiller.

Although DEUTZ anticipates that the market will stagnate in 2017, or perhaps grow slightly, it can already see early signs of a potential improvement in the market. A strong base effect has resulted from customers in Europe coming to the end of their inventories. Consequently, the company forecasts a marked increase in revenue. The EBIT margin before exceptional items is expected to increase moderately, mainly due to better capacity utilization and the positive effects of optimizing the site network. DEUTZ also anticipates substantial positive exceptional items from property transactions in the near future, some of which may be recognized in the current year, depending on the negotiations to be conducted.