- Solid first half of 2015 is in line with expectations
- Unit sales and revenue are down year on year due to advance production of engines
- Despite this, operating profit is level with H1 2014
DEUTZ AG has today announced its financial results for the first half of 2015. New orders, which totalled €670.7 million, were down by 10.2 per cent on the figure of €746.8 million reported for the first half of 2014. However, the level of new orders has risen over the course of the year, with the total volume of €349.7 million in the second quarter of 2015 representing a year-on-year rise of 5.1 per cent (Q2 2014: €332.6 million) and a quarter-on-quarter rise of 8.9 per cent (Q1 2015: €321.0 million).
In the first six months of the year, unit sales fell by 21.2 per cent, from 99,079 engines to 78,120 engines. Sales of 41,213 engines in the second quarter of 2015 were 11.7 per cent higher than in the previous quarter but were 24.5 per cent lower than in prior-year quarter (Q2 2014: 54,622 engines).
Revenue was in line with forecasts, falling by 11 per cent year on year to €670.2 million compared with €753.4 million in the first half of 2014. This decline was attributable to the changes to emissions standards for engines under 130kW that came into force in the European Union on 1 October 2014 and to the resulting effects from the advance production of engines. The Americas and Asia-Pacific regions achieved revenue growth, whereas the EMEA (Europe, Middle East and Africa) region saw a decline. In the second quarter of 2015, revenue stood at €352.1 million, which was a 10.7 per cent increase on the previous quarter but a 14.3 per cent decrease on the same period in 2014.
Despite the fall in revenue, operating profit (EBIT before one-off items) remained level with the comparable prior-year period (H1 2014: € 20.1 million). This represents an EBIT margin (before one-off items) of 3.0 per cent. Net income for the half-year period amounted to €16.7 million, a significant improvement of €14.0 million on the first half of the previous year (H1 2014: €2.7 million). The higher level of free cash flow was also encouraging. Having risen by €17.3 million to €26.2 million in the first half of 2015, the figure for the past twelve months has now climbed to €69.3 million.
"We are extremely pleased with the recovery in the DEUTZ share price. The price of our shares rose by 28.5 per cent in the first six months of 2015, outperforming all benchmark indices," said DEUTZ's Chief Financial Officer Dr Margarete Haase.
As announced, DEUTZ is adjusting its production capacity in China to reflect the new, lower level of market demand and is focusing on its existing DEUTZ Dalian joint venture. DEUTZ has reached an agreement with its partner Weichai Power on the sale of its shares in their joint venture WEIFANG WEICHAI-DEUTZ DIESEL ENGINE in Weifang, but the transaction is currently still subject to the approval of the relevant authorities in China. The sale of the shares is expected to make a small contribution to earnings.
The measures DEUTZ has implemented to optimise its network of sites in Germany are also progressing on schedule: "The first stage in the relocation of the exchange engine plant from Übersee am Chiemsee to Ulm, which involved moving the assembly line, was successfully completed over the past few months. On 6 July 2015, just after the end of the second quarter, we laid the foundation stone for the new DEUTZ shaft centre at our Cologne-Porz site, which will turn Cologne into an integrated site for large-scale production series," said Dr Helmut Leube, chairman of the DEUTZ AG Board of Management.
DEUTZ expects 2015 to be a year of transition dominated by lower demand resulting from the aforementioned advance production of engines in 2014. As a result, the company continues to forecast that revenue will decline by around 10 per cent compared with 2014 and that the EBIT margin (before one-off items) will improve slightly to roughly 3 per cent.
For detailed information about the first half of 2015, see the enclosed summary of key performance indicators.
For further information on this DEUTZ AG press release, please contact
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