DEUTZ AG: Further Strong Growth at DEUTZ | Financial Buzz

DEUTZ AG: Further Strong Growth at DEUTZ

DEUTZ AG has today published its consolidated financial results for the
first three quarters of 2018. New orders rose from EUR1,173.8 million to
EUR1,548.7 million, an increase of 31.9 per cent. In the third quarter
of 2018, new orders were up by 22.0 per cent to EUR452.2 million (Q3
2017: EUR370.8 million).

The unit sales figure for the nine-month period was 156,504 engines,
including 8,977 electric motors sold under the Torqeedo brand. This
equates to an increase of 32.3 per cent compared with unit sales in the
prior-year period (Q1-Q3 2017: 118,279 engines). Revenue advanced from
EUR1,093.2 million to EUR1,297.3 million, a rise of 18.7 per cent. In
the third quarter, revenue was up by a substantial 17.0 per cent to
EUR419.7 million (Q3 2017: EUR358.7 million).

Operating profit (EBIT before exceptional items) amounted to EUR45.9
million in the first three quarters of the year (Q1-Q3 2017 EUR26.7
million). Adjusted for effects on earnings in connection with the DEUTZ
Dalian joint venture, it stood at EUR60.3 million. Operating profit thus
improved at a significantly faster rate than revenue, despite the strike
at one of the Company’s suppliers. Consequently, the EBIT margin (before
exceptional items) improved to 4.6 per cent after adjusting for the
temporary drag on earnings resulting from DEUTZ Dalian and to 3.5 per
cent before adjustment for this drag on earnings (Q1-Q3 2017: 2.4 per
cent). In the third quarter of 2018, the EBIT margin was 3.0 per cent
(Q3 2017: 1.4 per cent).

“The strike at a supplier put a great deal of strain on management and
staff at our Company,” says the Chairman of the DEUTZ Board of
Management, Dr Ing Frank Hiller. “This makes our substantial revenue
growth, to which all regions and segments contributed, and our
significant increase in operating profit all the more pleasing. We took
further important steps that are aimed at securing growth in the future.
We have also succeeded in further expanding our licensing business in
China and are making good progress with the implementation of our
E-DEUTZ strategy.”

In the Chinese market, DEUTZ plans to generally reorganise its presence
so that it can generate stronger growth and be even more successful
there. As previously announced, DEUTZ signed contracts for the sale of
the former DEUTZ Dalian joint venture to its former partner FAW in
October 2018. The Company is also currently in talks about entering into
new alliances with major local partners in the construction equipment
and agricultural machinery industries.

Our E-DEUTZ strategy, introduced in 2017, is continuing to gather
momentum. Demonstrating fully working operational systems during the
ELECTRIP Event Week was the best way to prove our expertise in this
field. An interdisciplinary team of Torqeedo and DEUTZ design engineers
succeeded in integrating our drive concept into two prototype machines
in just six months. This shows that DEUTZ has mastered the technology
and is in a position to supply marketable electrification solutions.

For 2018 as a whole, DEUTZ (assuming no further supply shortage) expects
revenue to rise sharply to more than EUR1.6 billion. The EBIT margin
(before exceptional items) is forecast to improve to at least 4.5 per


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