Deutz’s 2024 Revenue Drops, But Earnings Stay Solid

German engine manufacturer Deutz Group posted €507.8 million in revenue in the fourth quarter of 2024, compared to €556.0 million in the fourth quarter of 2023, an 8.7-percent decline amidst challenging market conditions. For the full year, the company reported €1,813.7 million in 2024, down 12.1 percent from €2,063.2 million in 2023.

Nonetheless, Deutz met the guidance as adjusted in October 2024, and achieved adjusted earnings of €76.7 million, corresponding to an adjusted EBIT margin of 4.2 percent, a margin level Deutz had previously achieved only when production was running at significantly higher capacity utilization, the company said.

At €1,827.1 million, new orders were 4.4 percent higher than in the previous year, primarily because of the successful development of the portfolio. In 2024, Deutz acquired the U.S. genset manufacturer Blue Star Power Systems and took over the off-highway business for selected Daimler Truck engines from Rolls Royce Power Systems. Also, the sale of the loss-making subsidiary Torqueedo, completed in the spring of 2024, relieved pressure on the group’s results.

“The economic environment took a considerable toll on us over the past financial year, as demonstrated by a look at practically all of our sales markets,” said Deutz CEO Dr. Sebastian Schulte. “The good news is that we are making money even in these difficult times. Our strategy of putting Deutz on a progressively broader and more resilient footing is already paying off. We will therefore position ourselves even more strongly as a solution provider along the value chains we are familiar with. At the same time, we see considerable potential for further profitable expansion of our business with traditional internal combustion engines and our service business.”

Diversification strategy

Deutz’s Dual+ strategy is a diversification of the company’s portfolio. By entering the market for decentralized energy supply, adopting a demand-driven position in the field of alternative drive systems and expanding its global service business, Deutz has already reached some important milestones, it says. As the company continues to implement the strategy, it aims to increase revenue to around €4 billion by 2030.

Deutz began implementing an efficiency program over the past financial year with the goal of strengthening profitability. The program is intended to reduce 300 jobs with “minimum social impact” and to reduce operating costs.

“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, under which we intend to achieve a lasting reduction in our cost base of €50 million per year.”

Assuming a tangible market recovery in the second half of 2025, but before assessing the announced increase in U.S. import tariffs, Deutz expects revenue of between €2.1 billion and €2.3 billion for the 2025 financial year, accompanied by an EBIT margin before exceptional items (adjusted EBIT margin) of between 5.0 and 6.0 percent. Free cash flow before M&A expenditure is expected to be in the mid-double-digit millions of euros.