Deutz Ag · XETR:DEZ
Deutz — Investor Presentation (August 2016)
35 slides from Deutz's investor presentation, August 2016
Slide 1: DEUTZ Investor Presentation August 2016
DEUTZ Investor Presentation August 2016
Slide 2: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 2
Slide 3: DEUTZ at a glance
DEUTZ at a glance World’s first engine factory founded in 1864 by N.A. Otto, the developer of the four the stroke engine Independent manufacturer of diesel and gas engines up to 520 kw Engineering and manufacturing company with strong expertise as system integrator Profile Worldwide sales channels a
Slide 4: Corporate structure
Corporate structure DEUTZ Group DEUTZ Compact Engines DEUTZ Customised Solutions Liquid-cooled engines of up to 8 Air-cooled engines for on-road, off- litres cubic capacity for on- and off- road and marine applications road applications Liquid-cooled engines over 8 litres Large number of modular for
Slide 5: DEUTZ engines for EU Stage IV / US Tier 4 emissions standard
DEUTZ engines for EU Stage IV / US Tier 4 emissions standard Competitive product features: compact size, low fuel consumption, smart exhaust after-treatment DEUTZ engine portfolio will satisfy the next EU emissions standard announced for 2019 “Stage V ready” Expanding product range for Stage V: New
Slide 6: DEUTZ customer base
DEUTZ customer base Long standing customer relationships (not exhaustive) DEUTZ has a lot of long standing relationships with key customers Customer base extended and diversified with new emission engines New clients & greater share of wallet (not exhaustive) New customers attracted by the compact d
Slide 7: Successful business development
Successful business development Examples of new applications New customers gained in all regions Greater share of wallet at existing clients New business related to different applications 7
Slide 8: Key applications
Key applications Typical Markets benefit from application macro trends Construction equipment Material handling Mobile Machinery Ground support Mining equipment Tractors Agricultural Machinery Agricultural equipment Gensets Stationary Equipment Pumps Compressors Trucks Automotive Buses Rail vehicles
Slide 9: Revenue split by application
Revenue split by application H1 2016 (H1 2015) Other 3 % Mobile Machinery 42 % €19.8 million €272.7 million Automotive 7 % (€9.8 million) (€291.4 million) €41.6 million (€46.6 million) Stationary Equipment 12 % €644.4 million (€670.2 million) €77.7 million (€99.7 million) Agricultural Machinery 14 %
Slide 10: Revenue split by region
Revenue split by region H1 2016 (H1 2015) Africa/Middle East 5 % Europe (excl. Germany) 47 % €29.5 million €304.6 million (€43.1 million) (€314.5 million) Asia-Pacific 11 % €71.8 million (€65.1 million) €644.4 million (€670.2 million) Americas 20 % Germany 17 % €127.6 million €110.9 million (€164.4
Slide 11: Emissions standards drive revenue growth
Emissions standards drive revenue growth Average sales price per engine (indexed; FY 2011 = 100) 129 EU Stage IV / US Tier 4 engines 126 require exhaust after-treatment 117 116 devices 100 104 Growing share of new emission engines drives revenue growth Positive structural price mix effects are expec
Slide 12: Service business
Service business € million 285.6 Further solid service revenue 278.4 growth 250.3 253.7 259.3 241.6 Strong resilience of profitable service business through different economic cycles (1) 2011 2012 2013 2014 2015 2016 (1) H1 figures annualised Continued growth of service revenue 12
Slide 13: DEUTZ activities in China
DEUTZ activities in China JV DEUTZ Dalian Challenging capital goods market 359.8 conditions in China 339.5 329.8 319.1 Strategic decision to focus our 273.5 production in China on our JV 245.7 DEUTZ Dalian (DDE) which has sufficient capacities 107 106 DDE is a 50:50 JV with FAW 100 89 75 74 producin
Slide 14: Site optimisation
Site optimisation Cologne-Porz 2016 Cologne-Porz Cologne-Deutz Ulm 2015/17 Ulm Übersee (Chiemsee) Site optimisation measures fully on schedule; first relocation stage to Ulm completed Annual cost savings > €10 million (considerable effects already in 2016; full effects from 2017 onwards) Restructuri
Slide 15: R&D expenditure
R&D expenditure € million Spending on R&D has been 84.6 scaled back due to successful market launch of new engine generation 62.1 52.6 53.1 Ongoing R&D spending in 45.4 continuous product innovation 40.8 5.5 4.8 3.6 3.5 3.3 3.5 (1) 2011 2012 2013 2014 2015 2016 Net R&D expenditure Net R&D expenditur
Slide 16: Unit sales & profitability
Unit sales & profitability Thousand units 231 Volatile market environment 196 requires flexible production 179 184 Stable EBITDA margin at lower 138 139 unit sales Ramp-up phase of new engine 10.4 9.8 10.4 generation terminated 9.4 9.0 9.0 Higher capacity utilisation most important driver for profit
Slide 17: Cash deployment & dividend policy
Cash deployment & dividend policy Keep equity ratio above 40% Financial strength Robust financial framework in volatile markets Invest in profitable organic growth projects and service Internal funding Continuous product innovation Stable or growing dividend per share Dividend policy Dividend payout
Slide 18: Summary: DEUTZ key investment highlights
Summary: DEUTZ key investment highlights Successful extension of customer base Structural growth due to tighter emissions standards Continued growth of service revenue Sustainable efficiency improvement by merging facilities Robust numbers in down cycle High upside potential at market recovery Stabl
Slide 19: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 19
Slide 20: Key figures
Key figures H1 2016 yoy Q2 2016 qoq € million New orders 677.2 +1.0% 349.9 +6.9% Revenue 644.4 -3.8% 344.2 +14.7% EBITDA 66.9 -5.0% 35.6 +13.7% EBIT 20.7 +2.0% 13.4 +83.6% Net income 20.0 +19.8% 11.3 +29.9% Free cash flow -17.2 -€43.4 million 11.7 +€40.6 million Significant operating profit improvem
Slide 21: Sales figures
Sales figures New orders Unit sales Revenue € million Units € million 1.0% -10.8% -3.8% 78,120 670.7 677.2 6,767 69,706 670.2 644.4 132.7 4,899 140.7 141.9 131.9 71,353 64,807 530.0 544.5 528.3 512.5 H1 2015 H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 Revenue decreased to a lesser extent than unit sales
Slide 22: Revenue by quarter
Revenue by quarter € million 410.7 424.5 352.3 352.1 344.2 318.1 308.6 300.2 268.6 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Advance production of engines ahead of changes to European emissions standards for engines < 130 kW in October 2014 with significant influence on revenue Q2 2016 r
Slide 23: Operating profit & net income
Operating profit & net income H1 2015 H1 2016 € million 70.4 50.1 66.9 46.2 10.5% 20.3 2.1 1.5 10.4% 20.7 2.0 +1.3 20.0 16.7 EBITDA D&A EBIT Net Income Net EBITDA D&A EBIT Net Tax Net interest taxes income interest income income expense expense Operating profit benefitted from licence proceeds of €5
Slide 24: EBIT
EBIT € million 20.3 20.7 +0.9 -4.6 +4.1 H1 2015 H1 2016 EBIT margin 3.0% 3.2% Slight EBIT margin increase attributable to cost improvements and lower depreciation Operating profit decline at DEUTZ Compact Engines due to lower unit sales and higher R&D costs Licence proceeds at DEUTZ Customised Solut
Slide 25: Segment: DEUTZ Compact Engines
Segment: DEUTZ Compact Engines H1 H1 Change Q2 Q1 Change € million 2016 2015 in % € million 2016 2016 in % New orders 544.5 530.0 2.7 New orders 285.1 259.4 9.9 Unit sales 64,807 71,353 -9.2 Unit sales 35,037 29,770 17.7 Revenue 512.5 528.3 -3.0 Revenue 277.0 235.5 17.6 EBIT 1.9 6.5 -70.8 EBIT 4.2 -
Slide 26: Segment: DEUTZ Customised Solutions
Segment: DEUTZ Customised Solutions H1 H1 Change Q2 Q1 Change € million 2016 2015 in % € million 2016 2016 in % New orders 132.7 140.7 -5.7 New orders 64.8 67.9 -4.6 Unit sales 4,899 6,767 -27.6 Unit sales 2,557 2,342 9.2 Revenue 131.9 141.9 -7.0 Revenue 67.2 64.7 3.9 EBIT 21.4 17.3 23.7 EBIT 11.2 1
Slide 27: R&D spending & capital expenditure
R&D spending & capital expenditure R&D expenditure Capital expenditure (excl. R&D) € million 30.0 24.1 25.5 Gross expenditure 23.3 0.2 1.4 3.5 Reimbursements Net expenditure 22.7 25.3 19.8 Net R&D H1 2015 H1 2016 H1 2015 H1 2016 expenditure ratio(1) 3.0% 3.5% R&D expenditure remains at moderate leve
Slide 28: Working capital & operating cash flow
Working capital & operating cash flow Working capital Operating cash flow € million 216.4 227.1 53.9 15.4 Working H1 2015 H1 2016 H1 2015 H1 2016 capital ratio (30 June) 15.0% 18.6% Working capital increased by €10.7 million due to Operating cash flow decline attributable to working higher inventori
Slide 29: Free cash flow generation & net financial position
Free cash flow generation & net financial position Free cash flow(1) Net financial position € million 35.0 33.2 13.1 -8.4 2015 H1 2016 (LTM) H1 2015 H1 2016 Free cash flow in Q2 2016 amounted to +€11.7 Net financial position remains in positive territory million (1) Free cash flow: cash flow from op
Slide 30: Equity ratio & funding
Equity ratio & funding € million 1,088.1 1,103.8 45.5% 44.8% 495.6 494.5 160 16 15 35 1 2015 H1 2016 up to up to up to up to 1 year 2 years 5 years 10 years Total assets Equity xx.x% Equity ratio Repayment schedule Duration of credit lines Strong balance sheet Medium- to long-term financing with und
Slide 31: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 31
Slide 32: Market assessment
Market assessment 2016 Unit sales (equipment)(1) Construction equipment Europe -5% to +5% -5% to 0% Construction equipment North America (previous: -5% to +5%) Construction equipment China -20% to -10% Agricultural Machinery Europe -5% to 0% Automotive China -5% to +5% Recovery of key application ma
Slide 33: Financial outlook
Financial outlook FY 2015 FY 2016 € million reported guidance Revenue 1,247.4 stagnant or slight increase EBIT margin 0.4% moderate increase R&D expenditure(1) 40.8 slightly above 50 Capex (excl. R&D)(1) 56.2 approx. 55 (1) Net of reimbursements Full year guidance confirmed Revenue and profitability
Slide 34: Financial calendar & contact details
Financial calendar & contact details Interim management statement 1st to 3rd quarter 2016 8 November 2016 Annual report FY 2016 16 March 2017 Annual general meeting 4 May 2017 Contact details Christian Krupp Tel:+49 (0) 221 822 5400 SVP Finance, Public and Investor Relations Fax:+49 (0) 221 822 15 5
Slide 35: Disclaimer
Disclaimer Unless stated otherwise, all the figures given in this presentation refer to continuing operations. The details given in this document are based on the information available at the time it was prepared. This presents the risk that actual figures may differ from forward-looking statements.