DEUTZ Reports Strong Increase in First Quarter Revenue and Earnings

Group revenue advanced by 9.2%, with the agricultural machinery segment registering a particularly strong revenue increase of 16.0%.

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DEUTZ, one of the world’s leading manufacturers of innovative drive systems, has published its final results for the first quarter of 2019. 

DEUTZ has made an excellent start to the year, and all regions and segments have played their part,” says CEO Dr. Frank Hiller, summing up the company’s strong showing at the beginning of 2019. “We have surpassed the outstanding results for revenue and earnings achieved in the first quarter of last year. We are also reaffirming the forecast for 2019 as a whole on the basis of the high level of orders on hand. Our new strategy for China and our initiatives aimed at increasing profitability and embracing new technologies mean that DEUTZ is well positioned now and for the future. DEUTZ remains on a growth trajectory and we are well on the way to achieving our medium-term targets for 2022.”

High level of new orders sustained

DEUTZ is continuing to benefit from the sustained strength of customer demand, receiving orders worth €514.5 million in the first quarter of 2019. Although still at a high level, new orders were 10.5% lower than the extremely robust volume reported for the prior-year period, which had been positively influenced by exceptional items. Compared with the fourth quarter of 2018, new orders were up by 27.4% (Q4 2018: €403.9 million). Orders on hand as of March 31, 2019 totalled €497.6 million, which was 16.4% higher than a year earlier.

Strong rise in revenue

The DEUTZ Group’s revenue advanced by 9.2% to €452.8 million in the first 3 months of 2019. All regions and application segments contributed to this growth. The Agricultural Machinery application segment registered a particularly strong revenue increase of 16.0%. Revenue in the high-margin service business grew by 9.1%. In the Americas and Asia-Pacific regions, DEUTZ reported revenue growth that was comfortably into double digits.

Substantial increase in operating profit

The DEUTZ Group’s operating profit rose by 15.% to €25.1 million in the first quarter of 2019. This rise was largely due to the growth of revenue, a favorable shift in the product mix towards higher-value engines that meet the new exhaust emissions standards and positive currency effects. The EBIT margin improved from 5.2-5.5% during the reporting period.

Thanks to the rise in operating profit, net income went up by 14.8% compared with the prior-year period to reach €20.9 million. As a result, earnings per share increased from €0.15 to €0.17.

Segment: DEUTZ Compact Engines

  • Increase in revenue despite reassignment of the 2011 engine series to the DEUTZ Customized Solutions segment 
  • Improvement in profitability due to higher revenue from new engine series as well as positive currency effects

DEUTZ Customized Solutions segment 

  • Significant rise in new orders and revenue mainly attributable to the reassignment of the 2011 engine series to the DEUTZ Customized Solutions segment and to sales of higher-value engines
  • Improvement in operating profit for the segment primarily due to the reassignment of the engine series

Group forecast for 2019 confirmed

The continued strong demand from customers and current high level of orders on hand should provide a good degree of security for the DEUTZ engine business, particularly in the first half of the year. The Board of Management therefore confirms its forecast for 2019 as a whole, despite a generally challenging macroeconomic and geopolitical environment: revenue is expected to rise to more than €1.8 billion and the EBIT margin before exceptional items to at least 5.0%. The payment of the final installment of the purchase consideration from the disposal of the Cologne-Deutz site could result in an exceptional item that would increase earnings by around €50 million this year.