Deutz results: amid challenging conditions, the company remains profitable

Deutz can feel the effects of the ongoing fall in demand caused by the economic headwinds but remains profitable. This can be seen from the results published today for the first three quarters of 2024.

Revenue declined by (13.4%) to €1,305.9 million, partly because production was suspended at the headquarters in Cologne for three weeks during August. Nevertheless, the Company generated adjusted EBIT (EBIT before exceptional items) of €57.3 million and an adjusted EBIT margin of 4.4% (Q1–Q3 2023: 7.1%), not least due to the continued expansion of the high-margin service business.

New orders, which amounted to €1,346.2 million, were close to the level of the prior-year period. This was primarily due to the successful development of the portfolio resulting from the acquisition of US-based Blue Star Power Systems and its takeover of the off-highway business for selected Daimler Truck engines from Rolls-Royce Power Systems. Both of these transactions were completed in the third quarter. Their full effect on earnings will start in the fourth quarter.

“We are putting Deutz on a progressively broader footing and making ourselves ever more resilient. This is not only due to the improved operating performance but also to the development of the portfolio over the past two years, which means that we are able to earn money even during these difficult times,” explains CEO Sebastian C. Schulte. “We are maintaining this trajectory. By pursuing our updated strategy and the cost program that is now under way, we are laying the foundations for further profitable growth in the years ahead.”

The main changes that Deutz recently unveiled in respect of its Dual+ strategy are increased diversification of the portfolio, a demand-driven approach in the market for alternative drives, and a stronger positioning for the Company as a solution provider throughout its usual value chains, e.g. in the field of energy. The target is to increase revenue to around €4 billion by 2030.

Deutz has also launched a cost program in order to strengthen its profitability in a persistently difficult economic environment. The program is aimed at permanently lowering costs by €50 million by the end of 2026 and supplements the short-term measures already introduced, which are expected to generate savings of between €10 million and €15 million as early as the fourth quarter.

In recent weeks, steps have been defined under the cost program that set out the details and confirm the targeted permanent savings of at least €50 million. The validation and implementation of the steps is being managed by an interdisciplinary team headed up by the CFO and Labor Director, Oliver Neu. These steps include both structural measures, such as cutting jobs, and a permanent reduction in operating costs.

“We realize that the announced job cuts are creating uncertainty. And we will of course do everything we can to ensure that they are carried out as responsibly as possible. To this end, we have established a strong dialogue with the employee representatives so that negotiations can begin promptly and clarity can be provided for all employees as soon as possible. The aim is to inform all employees of the next steps in the process before Christmas,” stresses Oliver Neu.