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Moving forward: Our Strategy Update for DEUTZ

DEUTZ continues to develop its Dual+ strategy and launches a cost and transformation program to become even more resilient, diversified, and successful by 2030.

DEUTZ has not been immune to the tough economic climate in 2024. The fact that we were able to earn money even during these difficult times was due to a number of performance and portfolio measures that we have taken over the past two years. Already, DEUTZ is markedly more resilient than it was in the past. In particular, our business in the Americas and our service business helped to stabilize our revenue.

Given the general economic outlook, we realize that the measures we have previously implemented or initiated will not be sufficient. That is why we are continuing to develop our Dual+ strategy. In October 2024, we also launched a cost-cuting program, which saved around €20 million in the fourth quarter of 2024 alone, by reducing overtime, introducing short-time working in some production departments, making the travel policy stricter, among other things. Overall, we are aiming to reduce costs by €50 million by the end of 2026 on a sustained basis. The Board of Management and the management team will of course be making their own contribution.

The cost program includes job cuts in our Research & Development (R&D) department. We are also reducing our product development budget in the New Technology (New Tech) business unit, taking advantage of synergies in procurement and along the entire supply chain in the Classic and Service business units, and optimizing our production and location networks and the structures of the local subsidiaries. The headoffice functions are also being reviewed, and adapted where appropriate and necessary.

“All of this is happening in close consultation with the works council. We are convinced that by reducing our cost base on a sustained basis while at the same time firming up the details of our strategy, we are laying solid foundations for the future of DEUTZ, which will enable us to keep growing. We know where we have to make changes in the short term and what we are aiming for in the long term. That is crucial, and it is what we will keep working on together,” explains DEUTZ CFO Oliver Neu.

We are applying clear strategic criteria as we chart our course into the future. As we enter the ‘second horizon’, we are going to realign the Dual+ strategy. The updated strategy will be running in tandem with the Powering Progress transformation program, which focuses on the two aspects of structure and strategy. The transformation program combines a total of eleven initiatives, each of which defines processes, implements them, and also measures whether and to what extent the defined targets have been achieved.

Our overarching financial goal is to generate annual revenue of €4 billion and an EBIT margin of 10 % by 2030. Overall, we want to diversify DEUTZ more broadly and to develop the portfolio of the new Solutions segment further. In addition to alternative drives, this new segment also includes all of DEUTZ’s business activities that go beyond the manufacturing and servicing of engines and that are based in markets where DEUTZ is already familiar with the technology and associated services.

OUR LONG-TERM STRATEGIC APPROACHREFLECTS THE DYNAMIC DEVELOPMENTSIN THE MARKET ENVIRONMENT

 

The portfolio of our New Technology business unit (formerly Green) will become even more market-driven and we will focus on offering e-products and hydrogen combustion engines. Revenue in the Energy business unit, created through the acquisition of Blue Star Power Systems, is expected grow to more than €500 million per year by 2030.

The market consolidation in our Classic business is set to continue. We intend to carry on taking an active role in this business, by reducing costs and breaking into new growth markets. Production will continue to become more flexible through strategic alliances, such as our partnership with the Indian TAFE Group. By 2030, our classic internal combustion engine business is expected to contribute €2.2 billion, or around half, of DEUTZ’s revenue, with around 25 % coming from the high-margin service
business. Among other things, we intend to grow in this area through strategic acquisitions and new, smart service offerings. We are confident that our relevant portfolio and resilient setup will enable us to generate profitable growth, and that DEUTZ will continue to keep the world moving.

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