DEUTZ AG: High hopes for 2021 following a successful start to the year for DEUTZ
DGAP-News: DEUTZ AG
/ Key word(s): Quarterly / Interim Statement
Having finished a year dominated by coronavirus with a much improved fourth quarter in 2020, the uptrend for DEUTZ continued into the first quarter of 2021. This could be seen from the recently published preliminary results, which the Company has confirmed today. "The successful start to the year shows that DEUTZ is back on course for growth. Our new orders were up by around a third year on year in the first quarter of 2021, while orders on hand rose by almost a half. And although we will be dealing with the coronavirus pandemic for quite some time to come, we anticipate a sustained increase in customers' propensity to proceed with capital expenditure in all of the main application segments," said DEUTZ CEO Dr. Frank Hiller. As well as a healthy operating performance, further strategic milestones were reached. In China, the world's largest engine market, the joint venture with SANY continues to operate profitably. Its unit sales amounted to around 8,000 engines in the first quarter of this year and the aim is to increase this to between 35,000 and 40,000 engines in 2021. At the Tianjin site, DEUTZ and BEINEI have begun to manufacture the 2.9 engine series as planned. Establishment of the purchasing organization in China is also proceeding according to schedule. The intention behind this is to achieve the highest possible localization rate and thus significantly lower costs for materials and logistics. DEUTZ also forged ahead with the ongoing expansion of its high-margin service portfolio in the reporting period. At the start of 2021, the Company added to its analog service concepts by launching a Lifetime Parts Warranty for engines that have been registered with DEUTZ online. Recording these engines in the internal service systems is an important step to be able to further optimize DEUTZ's service offering and strengthen customer loyalty. Activity under the regional growth initiatives included expansion of the service network in the USA: The establishment of a new DEUTZ Power Center got under way in the Dallas metropolitan area. The ongoing expansion supports the planned increase in total revenue of the profitable service business to around €400 million by the end of 2021. At the start of February, DEUTZ signed a long-term supply agreement with agricultural equipment manufacturer SDF. As well as the supply of engines with a capacity of below and above 4 liters, the agreement includes expansion of the service business between the two companies and is expected to result in additional annual revenue in the low-double-digit millions of euros. DEUTZ CFO Dr. Sebastian C. Schulte reported on the progress with the efficiency program: "The restructuring measures that we have initiated are already having a noticeable positive impact. For example, the cost savings achieved enabled us to significantly improve our profitability in the reporting period. This shows that we are on the right track to be able to lower the break-even point to our target of 130,000 DEUTZ engines." By the end of 2022, DEUTZ intends to realize potential cost savings of around €100 million gross per year, compared with the base year of 2019. Another important milestone in this context was achieved with regard to the voluntary redundancy program, which originally aimed to reduce the number of positions by 350 but had been taken up 361 employees by the time that the program ended. New orders up sharply by around a third Year-on-year rise in unit sales of DEUTZ engines Revenue increased only slightly year on year due to coronavirus Strong improvement in profitability; efficiency program already paying off As a result of the increase in operating profit, the net loss declined by €9.1 million to €0.9 million. Earnings per share therefore improved from minus €0.08 to minus €0.01. The net loss before exceptional items stood at €0.5 million and earnings per share before exceptional items at €0.00. Clear improvement in free cash flow and comfortable financial position Net financial debt was slightly higher than at the end of 2020, rising by €3.4 million to €87.2 million as at March 31, 2021. In view of the sound equity ratio, which - as it had been in the prior-year period - was above the target figure of 40 percent, the DEUTZ Group's financial position remains comfortable. Moreover, the Company continues to have unutilized credit lines totaling around €245 million at its disposal. Positive outlook for 2021 and 2023/2024 In the medium term, DEUTZ continues to predict an increase in revenue to more than €2.0 billion in 2023/2024 and an EBIT margin before exceptional items of between 7 percent and 8 percent.
The quarterly statement is available on the Company's website at DEUTZ AG: Investor Relations. DEUTZ AG / Svenja Deißler / Investor Relations
06.05.2021 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. |
Language: | English |
Company: | DEUTZ AG |
Ottostraße 1 | |
51149 Köln (Porz-Eil) | |
Germany | |
Phone: | +49 (0)221 822 0 |
Fax: | +49 (0)221 822 3525 |
E-mail: | ir@deutz.com |
Internet: | www.deutz.com |
ISIN: | DE0006305006 |
WKN: | 630500 |
Indices: | SDAX |
Listed: | Regulated Market in Dusseldorf, Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange |
EQS News ID: | 1193059 |
End of News | DGAP News Service |
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1193059 06.05.2021