Deutz results: revenue up by almost 8 % in 2023

Within a persistently challenging macroeconomic environment, Deutz stayed on course in the 2023 financial year and achieved record results for revenue EBIT. The drive manufacturer grew its revenue by 7.8 % to around €2.1 billion. The company also significantly increased its profitability: adjusted earnings were up by just under 35 % and the margin rose by 1.1 percentage points to 5.7 %. The company thereby achieved the upper end of the earnings guidance it last specified in November. For the new financial year, Deutz expects revenue of between €1.9 billion and €2.1 billion and an EBIT margin before exceptional items of between 5.0 and 6.5 %.

“With the Dual+ strategy we presented at the start of 2023, we are focusing on clean combustion engines, market-oriented green technologies, and the global expansion of our service business. The results for the past financial year prove that this approach is working,” notes Deutz CEO Sebastian C. Schulte. “At the same time, we are delivering step-by-step what we set out to do. We achieved the guidance we upgraded during the course of the year. And the potential of the company becomes even more apparent when taking the 7 % EBIT-margin of our continued operations into account.”

Strong growth in business with classic combustion engines

With almost 187,000 diesel engines sold, Deutz achieved strong organic growth in its Classic segment and increased its margin to 8.8 %. The company is continuing to advance market consolidation in the area of classic combustion engines through targeted acquisitions and partnerships. The partnership with Daimler Truck and planned takeover of service and sales activities for selected mtu engines from Rolls-Royce Power Systems has enabled the company to take an important step towards its objective of becoming one of the top three independent engine manufacturers by 2030.

Working with partners to create a climate-neutral product ecosystem

The first series order for the Deutz hydrogen engine shows that combustion technology can form a building block on the path to a climate-neutral product portfolio. The repositioning and refocusing of the Green segment which has been initiated establishes the preconditions required to meet this objective. The divestiture of electric boat engine specialist Torqeedo to Yamaha Motors represents an important step. Closing is expected after easter. The resources that have been freed up enable Deutz to drive forward the development of alternative drive systems more rapidly and with a stronger alignment to market and customer requirements.

Deutz’s results for 2023 in detail

The Deutz Group’s new orders amounted to €1,797.3 million in the 2023 financial year, below the previous year’s high level of €2,033.6 million. Firstly, this reflects lower demand, particularly in the Construction and Agricultural equipment segments, and secondly, the previous year was positively impacted by around €100 million of extraordinary, advanced purchasing effects.

In regional terms, new orders in America posted slight growth in the reporting period. The EMEA region, by contrast, recorded a tangible reduction, while Germany showed a solid development with only a slight decrease. In terms of application areas, the trend was also mixed: the Material Handling and Service segments recorded growth; by contrast, new orders for Stationary Equipment, Agricultural Equipment, and Construction Equipment stood significantly below the previous year’s level.

Orders on hand decreased from €773.5 million as of December 31, 2022, to €463.2 million as of the end of 2023, indicating a normalized, stable order situation for the coming months. Unit sales of Deutz Classic engines grew by 3.0 % to 186,718 units. The positive trend was driven by growth in the Material Handling application area.The Construction, Agricultural, and Stationary equipment segments all recorded single-digit percentage reductions. In regional terms, the Americas recorded the most significant increase with growth of 13.8 %, particularly reflecting higher unit sales in the Material Handling segment. Deutz recorded slight growth in the EMEA region, while the Asia/Pacific region was down by almost 10 % due to weaker demand from China.

In line with the positive trend in unit sales of Deutz Classic engines, Deutz generated revenue growth of 7.8 % to €2,104.8 million in the reporting period. All application areas performed well, with the exception of the Agricultural Equipment and Miscellaneous segments. The Classic segment grew by 8.9 % to €2,058.2 million, while revenue in the Green segment was down by -27.5 % to €46.4 million. With revenue growth of 7.5 % to €483.8 million, the Service segment’s share of Group revenue amounted to 23.0 %. Parts sales and Deutz Xchange performed particularly well.

In the Deutz Group’s continued operations, revenue was up by 9.0 % to €2,063.2 million. The revenue share of the continued operations of the Green segment was €5.0 million. Strong improvement in profitability EBIT before exceptional items (adjusted EBIT) improved from €89.4 million to €120.4 million in the reporting period, reflecting 34.7 % growth. This improvement is attributable to business volume growth, the successful implementation of the growth strategy in the Service area, as well as reduced costs. Additional cost burdens due to higher personnel, energy, and material prices were successfully mitigated by pricing in line with the market. This was offset by higher selling and administrative expenses, negative currency effects, and negative earnings contributions from the Deutz subsidiary Torqeedo and the Chinese joint venture Hunan Deutz Power.

While Deutz Classic’s EBIT before special items rose by 40.6% year-on-year to €180.1 million, adjusted earnings in the Green segment declined as expected to €-60.3 million, compared with €-39.2 million in the previous year. This is due to higher losses at Torqeedo and high investments in research and development.

The adjusted EBIT margin also rose significantly year-on-year, from 4.6 % to 5.7 %. In the high revenue Classic segment, which encompasses all activities related to the development, production, distribution, and maintenance of diesel and gas engines as well as the related service business, the adjusted EBIT margin improved from 6.8 % to 8.8 %.