DEUTZ AG suffered a severe collapse in business in 2009 as a result of the global economic crisis. New orders for 2009 as a whole fell by 38 per cent to € 842.3 million (2008: €1,363.5 million). Unit sales more than halved to a figure of 117,961 engines (2008:
252,359 engines). Due to a positive shift in the product mix towards a higher proportion of larger engines, the decline in revenue was much less pronounced - down 42.2 per cent to €863.4 million for the year (2008: €1,495.0 million).
However, DEUTZ has used this crisis in its sales markets as an opportunity to restructure the Company and its processes. The MOVE action programme to reduce costs and raise efficiency has boosted earnings by €136 million since it was launched in the fourth quarter of 2008, including a permanent annual contribution to earnings of €85 million. Major savings have been achieved in material costs and in operating overheads as well as through
personnel restructuring measures that have been taken in back-office functions in order to reduce fixed costs and enhance competitiveness.
DEUTZ also managed to generate a positive operating cash flow of €117.4 million through stringent working capital management, and emerged from the crisis effectively debt-free with a positive net financial position of €2.9 million as at 31 December 2009.
These measures did not fully offset the decline in sales volumes but went a considerable way towards doing so, with DEUTZ reporting an operating loss (EBIT before one-off items) of €46.3 million.
The upturn in the fourth quarter, however, illustrates that DEUTZ has now turned the corner. There was a pronounced upturn in new orders in the fourth quarter, up 12 per cent on the figure for the third quarter of 2009. DEUTZ recorded a particularly strong increase in
new engine orders for the construction equipment sector. Unit sales also surged ahead in the fourth quarter with an increase of 18 per cent. With revenue up 19 per cent on the previous quarter, the fourth quarter was also the strongest in terms of revenue in 2009.
DEUTZ has also reached an agreement with its US investors that marks a major milestone on the way to a permanent restructuring of the Company's long-term funding. As the financial covenants attached to the bond were in danger of being breached in the wake of the global economic crisis, DEUTZ promptly entered into discussions with the investors last year in order to secure ongoing funding. Agreement has now been reached on the terms of the follow-on financing. "We have negotiated a very good solution for DEUTZ." noted Dr Margarete Haase, member of the DEUTZ Board of Management with responsibility for finance, human resources and investor relations. "The successful private placement has secured long-term funding for the Company and will make it possible to generate further investment and growth. The agreement with investors is evidence of the confidence in the future of our Company."
DEUTZ AG has started 2010 with new drive. The Company anticipates a significant year-on-year increase in both unit sales and revenue and expects to achieve an operating profit for the year. At the same time, DEUTZ will maintain the high levels of investment in research and development in order to consolidate its position as technology leader. Despite the crisis in 2009, DEUTZ invested even more heavily in research and development than in 2008, laying the foundations for a new product and market strategy aimed at counteracting the cyclical nature of the business.
Dr Helmut Leube, chairman of the Board of Management of DEUTZ AG: "Overall, DEUTZ is emerging stronger from the crisis and, as a company with a distinguished track record and new drive, can look to the future with optimism."
If you need further information please contact:
Investor Relations
Maria Babilas
Tel.: +49 (0)221 822-5400
Fax: +49 (0)221 822-15-5400
E-Mail: babilas.m@deutz.com
Public Relations
Georg Diderich
Tel.: +49 (0)221 822-2200
Fax: +49 (0)221 822-15-2200
E-Mail: diderich.g@deutz.com
