Solid First Quarter for Deutz Despite Market Headwinds

Cologne, Germany-based engine manufacturer Deutz posted €489 million in revenue in the first quarter of 2025, compared to €454.7 million in the first quarter of 2024, a 7.5-percent increase. New orders were valued at €546.1 million compared to €419.2 million in the year-ago quarter, a 30.3-percent leap. Earnings were €21 million, which the company viewed as healthy despite a lackluster market environment.

Deutz’s adjusted EBIT margin was 4.3 percent, an encouraging earnings performance that was a result of forging ahead with the established Dual+ strategy and included enhanced positive effects from the Future Fit program, launched at the end of 2024, aiming at reducing costs and raising efficiency.

The consistently strong service business and the successful restructuring of the portfolio had a favorable impact as well, the company said.

“Our strategy of putting Deutz on a progressively broader and more resilient footing is bearing even greater fruit,” said Deutz CEO Dr. Sebastian Schulte. “The wider economic conditions continue to present us with challenges, but we remain comfortably profitable even in these times. The acquisition of selected Daimler Truck engines and the entry into the genset business are just two examples of how we are increasingly strengthening our resilience and laying the foundations for the next strategic steps.”

M&A activity and power generation

Having acquired Blue Star Power Systems, a U.S. manufacturer of gensets, and having taken over the off-highway business for selected Daimler Truck engines from Rolls-Royce Power Systems in August 2024, Deutz then acquired a specialist in exhaust aftertreatment, HJS Emission Technology, in January. Deutz also recently agreed to an acquisition of Urban Mobility Systems, a Dutch innovation leader in battery-powered drives for off-highway applications. This latest acquisition will give Deutz a technological edge in the Deutz New Technology business unit and open up much broader access to the market. As well as progressively diversifying its portfolio, the company is taking further steps to increase its profitability. The efficiency program has the goal of permanently lowering costs by the end of 2026.

“The cost-cutting measures that we introduced at short notice led to savings of just over €15 million last year,” said Deutz chief financial officer Oliver Neu. “Our task now is to expand the measures already taken and to consolidate them. And this is precisely the objective of our Future Fit program. By implementing the program, we intend to achieve a lasting reduction in our cost base of €50 million per year. We have made good progress, particularly with regard to adjusting staffing levels.”

Cash flow from operating activities totaled €50.9 million in the first quarter of 2025, compared to €24.7 million in the first quarter of 2024. The rise in cash flow from operating activities resulted in free cash flow of €23.8 million (€23.4 million before mergers and acquisitions) in the first quarter of 2025, compared with €5.1 million in the first quarter of 2024.

Deutz is projecting revenue between €2.1 billion and €2.3 billion for 2025 assuming that the market will recover noticeably in the second half of 2025 and that measures to mitigate the impact of the tariff situation prove effective. The company expects free cash flow, excluding any M&A expenditure, to be in the mid-double-digit millions of euros.