US factory workers on the job in Pendergrass Ga
U.S. factory workers on the job in Pendergrass, Ga.

New Engine Orders Rise for Deutz in 2016

Deutz AG increased new orders by 2.9 percent in 2016, amounting to €1,261.4 million (about U.S. $1,357 million) with new orders increasing in the Construction Equipment, Material Handling and Agricultural Machinery application segments, and in the service business. In total the company sold 132,539 engines, representing a drop of 3.8 per cent compared to last year's figure of 137,781 engines.

Broken down by region, revenue was up by 3.3 per cent in the EMEA (Europe, Middle East and Africa) region and by 15.9 per cent in the Asia-Pacific region, but down by 13.0 per cent in the Americas. Operating profit (EBIT) rose by €18.5 million to €23.4 million in 2016. The EBIT margin improved to reach 1.9 per cent, compared with 0.4 per cent the year before. Net income increased from €3.5 million in 2015 to €16.0 million, which resulted in earnings per share of €0.14 compared with €0.04 for the same period of the previous year.

“We have seen earnings improve on the back of lower material costs and depreciation and amortization,” said Dr. Margarete Haase, chief financial officer for Deutz. “We have also benefited from the first positive effects of optimizing our site network in 2016. These measures are well advanced and will deliver a positive contribution to earnings of around €10 million in 2017 – and an even higher contribution in future years as capacity utilization rises.”

Although Deutz anticipates that the market will stagnate in 2017, or perhaps grow slightly, it can already see early signs of a potential improvement in the market. A strong base effect has resulted from customers in Europe coming to the end of their inventories. Consequently, the company forecasts a marked increase in revenue. The EBIT margin before exceptional items is expected to increase moderately, mainly because of better capacity utilization and the positive effects of optimizing the site network. Deutz also anticipates substantial positive exceptional items from property transactions in the near future, some of which may be recognized in the current year, depending on the negotiations to be conducted.

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