Deutz results: first quarter of 2024

In the first quarter of 2024, in a market environment that remained challenging amid difficult economic conditions, Deutz maintained its profitability and confirmed its guidance. Although new orders from continuing operations decreased, as expected, by 18.7 percent compared with the prior-year quarter due to the weak economic climate and normalization effects, they were up by nearly 20 percent on the previous quarter.

However, the year-on-year fall in revenue was much lower than the fall in unit sales and new orders. The positive and stable EBIT margin of 6.1 percent for continuing operations bears out the Company’s robust positioning. The corresponding adjusted EBIT figure, although down on the prior-year, remained comfortably in positive territory in the first quarter of 2024 at €27.7 million.

“As is evident in our figures for the first quarter, the much weaker economic environment is starting to have an effect on us, too. The good news is that we are considerably more robust than before,” says Deutz CEO, Sebastian C. Schulte. “This is the result of the operational measures that have already been taken as part of our new strategy including our growing service business. The restructuring of our portfolio is also helping to ensure that we are better able to withstand a difficult economic environment than we were in the past.”

After entering into an alliance with Daimler Truck last year, Deutz pressed ahead with the takeover – announced in December 2023 – of the sales and service activities of Rolls-Royce Power Systems that would give it access to the Daimler Truck engines. The relevant agreements were signed in the first quarter of 2024 and represent a further milestone in the implementation of Deutz’s Dual+ strategy. The transaction, which is likely to be completed in summer 2024, is expected to generate additional annual revenue of around €300 million and an EBIT margin that is above the Group’s current margin.

Meanwhile, Deutz is forging ahead with the strategic realignment of the Green segment, which began in summer 2023. The sale of the Torqeedo Group was completed soon after the end of the first-quarter reporting period on April 3, 2024. The proceeds of the sale, amounting to a figure in the high double-digit millions of euros, are expected to result in the recognition of a book gain in the low double-digit millions of euros in the second quarter of 2024.

The robust positioning of Deutz is also underlined by the latest figures for its financial position: “Our free cash flow for continuing operations remains in positive territory, although the difficult economic conditions have left their mark,” explains CFO, Timo Krutoff.

In 2024 the Company is expecting to achieve unit sales of between 160,000 and 180,000 Deutz engines, revenue of €1.9 billion to €2.1 billion, an adjusted EBIT margin of between 5.0 percent and 6.5 percent, and free cash flow (before M&A activities) in the mid-double-digit millions of euros. Based on the Company’s business performance in the first quarter of 2024, as described here, and on its anticipated performance going forward, Deutz is convinced that it is on track to meet these targets and therefore confirms its guidance.