To sum up the results of Deutz for the first half of 2019, we can use the words of Frank Hiller, Chairman of the Board of Management of Deutz: «We maintained our growth trajectory in all regions and main application segments and did so despite emerging signs of an economic slowdown. We also demonstrated our operational strength and increased earnings by a significant double-digit amount. Our orders on hand remain at a high level, so we are on track to achieve the targets that we set ourselves for the year as a whole».

deutz first half 2019


A first half of 2019 still with a good amount of orders

Deutz received orders worth € 953.3 million in the first half of this year. Although still at a high level, new orders were 13.1 percent lower than the ones registered in 2018, which had been positively influenced by a change in customers’ ordering patterns. In addition to this year-on-year effect, a weakening of demand as a result of the economic climate had an adverse impact on the final figure for this year, with new orders in the second quarter decreasing by 15.9 percent to € 438.8 million.


Revenue up on previous year

Deutz registered a growth in revenue of 5.9 percent to € 929.8 million so far this year. The material handling application segment performed particularly strongly, delivering revenue growth of 8.8 percent, as did the high-margin service business, whose revenue was up by 7.9 percent. In the regional breakdown, the strongest growth momentum was recorded in the Americas and in Asia-Pacific, which grew by 15.8 percent and 15.5 percent respectively.

In the Americas region, Deutz particularly benefited from the general recovery in the market and from higher demand for new engine series. Factors in the substantial increase in revenue generated in the Asia-Pacific region included business with new customers as well as revenue growth in China and other Asian countries.

The figures of compact engines and customized solutions

On the compact engines side, Deutz registered 81,924 units sold, with a total revenue of € 729.8 mln, respectively down 13.3 % and 1.1 % compared to 2018. Even so, the EBIT margin (in precentage) registered was 4.8, up 200 bps compared to the previous year (2.8), thanks to the rise in proportion of higher value engines and engine series reassignment.

The customized solutions department saw an increase of +207.5 % in units sold compared to 2018 (from 4,393 to 13,509), with a relative revenue that went from 125.8 up to 185.0 due to the effect of the inclusion in this segment of the 2011 engine series and of the greater proportion of earnings generated by the high margin service business.

EBIT margin saw nonetheless a decline of -140 bps (from 14.2 in 2018 to 12.8) because the profit margin of the 2011 engine series is significantly lower than that of the other series.

Up also in terms of operating profit

In the first six months of 2019, operating profit went up by 41.3 percent year on year to reach € 47.2 million. Besides the growth in revenue, this significant increase was primarily due to a low figure being reported in the prior-year period, affected by a drag on earnings resulting from the joint venture Deutz Dalian Engine in China. The joint venture has since been sold. However, there were also negative effects on earnings in the first half of 2019 relating to the deconsolidation of the Argentinian company Deutz Agco Motores.

The Ebit margin before exceptional items increased from 3.8 percent to 5.1 percent during this year. Positive exceptional items of € 9.3 million arose from the sale of a small part of the land at the former Cologne-Deutz site and were recognized in the second quarter of 2019 in accordance with the sale agreement from 2017. After taking these items into account, Ebit amounted to €56.5 million, which was 69.2 percent higher than in the first half of 2018.

Because of the growth in Ebit, net income increased by 79.1 percent to reach € 45.3 million. Earnings per share rose from € 0.21 to € 0.37. Adjusted net income went up by 48.2 percent to € 37.5 million.



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