Deutz Reports 18.4-Percent 1Q08 Revenue Increase

Deutz Ag last week reported its first-quarter 2008 revenue grew by 18.4 percent to €397.0 million (about U.S. $618.1 million) compared with €335.4 million (U.S. $522.2 million) a year ago. This revenue growth was driven by the success of the new TCD 2013 4V engine, unit sales of which were up 30 percent in the period under review.

The company increased unit sales overall by a total of 14.3 percent to 72,786 engines. EBIT rose 36.8 percent to €19.7 million (U.S. $30.7 million) from €14.4 million (U.S. $22.4 million). This increase was attributable to higher revenue accompanied by better margins. As a result, Deutz improved its EBIT margin by 0.7 percentage points to 5.0 percent in the first three months of 2008. Net income climbed to €13.5 million (U.S. $21.0 million) from €8.0 million (U.S. $12.5 million) in the year-ago period, a rise of 68.8 percent.

“We are extremely pleased with the growth in net income in the first quarter,” said Dr. Helmut Leube, chairman of the management board. “It demonstrates that Deutz is on the right track. The order situation is stable and we are looking to the future with some optimism.

“On the basis of the excellent net income for the first quarter, we are sticking to the targets we have set ourselves for 2008. Sustained growth is a feature of our core markets and we are taking a share of the dynamic growth in Asia via our joint venture Deutz Dalian.”

For the current financial year, Deutz is predicting double-digit revenue growth of between 10 and 15 percent, and a further improvement in the EBIT margin to around 7 percent. For the first time, the group is aiming to sell more than 300,000 engines. It is also planning capital expenditure of more than €100 million (U.S. $155.7 million) in 2008. In addition, the company intends to invest €80 million (U.S. $124.6 million) in the development of innovative new technologies. A key area of development will be exhaust-gas after-treatment.

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