Despite an 11.4 percent revenue boost, engine manufacturer Deutz will not meet its previous forecast for the current financial year, the company announced, because of significant costs incurred over the coming years in connection with warranties and goodwill for engines from the Deutz Compact Engines segment, primarily related to engines manufactured in 2011. In the third quarter of 2014, there was an unexpected charge against earnings of €20.4 million because of warranty costs.
According to preliminary results, new orders in the third quarter of 2014 were €330 million (about U.S. $417.5 million), down from €360 million in the third quarter of 2013. Revenue, however, increased 11.4 percent to €424.6 million. Excluding the charge against earnings, operating profit was €23.1 million, compared to €17.1 million a year ago, a 35.1-percent leap.
New orders in the third quarter for the Deutz Compact Engines segment was €270.4 million, compared to €315.1 million in the year-ago quarter. Excluding the unexpected charges, however, EBIT margin was 5.3 percent, compared to 2.3 percent a year ago.
Deutz said it expects to generate revenue of about €1.5 billion for the full year, a 3-percent increase compared to 2013.
Deutz said it will provide a new earnings outlook when it releases its full quarterly report Nov. 6.