DEUTZ AG today presented its overall positive results for the first half of 2014. Unit sales and revenue have increased significantly on the previous year and operating profit before one-off items has almost doubled.
At €746.8 million, the level of new orders for the first half of 2014 was, however, unable to match the record level of the prior year (H1 2013: €843.5 million). Following several quarters with particularly high levels of new orders, the second quarter of 2014 saw a drop to €332.6 million, compared with €414.2 million in the preceding quarter.
Unit sales in the period under review rose to 99,079 engines, an increase of 15.3 per cent on the same period of the previous year (H1 2013: 85,907 engines). There was a particularly strong rise in the second quarter of 2014, which saw a total of 54,622 engines sold, an increase of 10.0 per cent on the same period of the previous year and of 22.9 per cent on the preceding quarter.
Revenue also increased in the first six months of the current year compared to the same period of the previous year, rising by 13.8 per cent to a total of €753.4 million (H1 2013: €662.1 million). Revenue growth was achieved across all three of the company's regions: EMEA (Europe, Middle East and Africa), the Americas and Asia-Pacific.
There has also been a clear upward trend over the course of the year to date. In the second quarter of 2014, DEUTZ generated €410.7 million, an increase of 10.3 per cent on the same period of the previous year and of 19.8 per cent on the preceding quarter.
Thanks to improved capacity utilisation, operating profit (EBIT before one-off items) was almost twice the level of the same period of the previous year, reaching €20.1 million (H1 2013: €10.1 million). After taking account of one-off items incurred in connection with the site optimisation measures initiated in Cologne-Deutz and Übersee on Lake Chiemsee, operating profit amounted to €6.2 million. Net income amounted to €2.7 million for the six months ended 30 June 2014, compared with €5.4 million for the prior-year period. The downward trend in net financial debt remained encouraging. It fell to €31.8 million, which was €13.1 million lower than the figure at 30 June 2013.
“We are particularly pleased that we were able to pay our shareholders a dividend totalling just short of €8.5 million in May 2014,” noted Dr Margarete Haase, Chief Financial Officer of DEUTZ. “We intend to continue enabling our shareholders to share in the success of the company by way of a dividend in future. We anticipate further improvements in earnings over the coming years as a result of the optimisation process that we have initiated for our network of sites.”
DEUTZ will move out of its Cologne-Deutz facility over the course of the next two years and will construct a new shaft centre for the manufacture of camshafts and crankshafts at its largest site in Cologne-Porz. In addition, the plant in Übersee on Lake Chiemsee will be closed and production of exchange engines will be incorporated into the assembly plant in Ulm. DEUTZ anticipates a significant boost to operating profit from the optimisation of its network of sites, amounting to more than €10 million per year from the year 2017. An amount significantly in excess of the capital investment of around €20 million is expected to be realised from the sale of real estate in subsequent years.
In the second quarter of 2014, DEUTZ recognised one-off expenses of €13.9 million in connection with the optimisation of its site network. In total, the measures will reduce earnings in 2014 by up to €20 million.
DEUTZ reaffirms its forecast for the current financial year. Low double-digit revenue growth is forecast for 2014. The EBIT margin is predicted to exceed 4.0 per cent before one-off items and 3.0 per cent after the one-off items arising from the site optimisations mentioned above. Looking forward over the medium term, the company expects to remain on its growth course as business in Asia, one of the company's most important growth markets, is performing well: “We have managed to win major new customer projects during the current financial year,” commented Dr Helmut Leube, chairman of the Board of Management of DEUTZ AG. “For example, we established a long-term partnership with Tong Yang Moolsan (TYM), a Korean manufacturer of agricultural machinery. TYM is the first tractor manufacturer in Asia to be supplied by DEUTZ. This collaboration with TYM will strengthen our international presence, particularly in Asia and North America.”