Deutz Ag · XETR:DEZ
Deutz — Investor Presentation (March 2017)
34 slides from Deutz's investor presentation, March 2017
Slide 1: DEUTZ Investor Presentation March 2017
DEUTZ Investor Presentation March 2017
Slide 2: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 2
Slide 3: DEUTZ at a glance
DEUTZ at a glance Founded in 1864 by N.A. Otto, the developer of the four stroke engine Independent manufacturer of diesel and gas engines in the 25 to 520 kw power range Company profile Worldwide sales channels and service network Leading technology and high-quality products Blue chip customer base
Slide 4: Customer base
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 emissions engines New clients & greater share of wallet (not exhaustive) New customers attracted by the compact design
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 EU Stage V em
Slide 6: Application expertise
Application expertise Example: DEUTZ 2.9 litre engine meets technical requirements of different applications and customers Same base engine applied for a wide range of equipment classes DEUTZ application expertise to serve different customer needs 6
Slide 7: Key applications
Key applications Typical Markets benefit from application macro trends Excavator, Construction equipment Wheel loader, Paver Underground mining Forklift truck, Telehandler Material handling Aerial work platform Ground support Tractor Agricultural machinery Harvester Genset Stationary equipment Pump
Slide 8: Revenue split by application
Revenue split by application 2016 (2015) Other 3 % Construction Equipment 28 % €32.9 million €350.0 million Automotive 6 % (€20.5 million) (€334.7 million) €77.2 million (€87.9 million) Stationary Equipment 11 % €1,260.2 million Service 23 % (€1,247.4 million) €147.3 million €287.3 million (€178.1 m
Slide 9: Revenue split by region
Revenue split by region 2016 (2015) Africa/Middle East 5 % Europe (excl. Germany) 47 % €62.3 million €588.6 million (€95.5 million) (€585.5 million) Asia-Pacific 12 % €147.9 million (€127.6 million) €1,260.2 million (€1,247.4 million) Americas 19 % Germany 17 % €239.6 million €221.8 million (€257.3
Slide 10: Emissions standards drive revenue growth
Emissions standards drive revenue growth Average sales price per engine (indexed; FY 2011 = 100) 131 EU Stage IV / US Tier 4 engines 126 require exhaust after-treatment 117 116 devices 100 104 Growing share of new emissions engines drives revenue growth Positive structural price mix effects are expe
Slide 11: Service business
Service business € million 278.4 287.3 Strong resilience of profitable 250.3 253.7 259.3 service business through 241.6 different economic cycles Future growth driven by investments in the service network and multiple service initiatives 2011 2012 2013 2014 2015 2016 Continuous growth of service rev
Slide 12: Activities in China
Activities in China JV DEUTZ Dalian Countrywide sales and service 359.8 network 339.5 319.1 303.0 DEUTZ Dalian manufactures 273.5 diesel engines compliant to 245.7 Chinese emissions standards First Automotive Works is our 107 106 Joint Venture partner and key 100 89 75 account for light & medium dut
Slide 13: Site optimisation
Site optimisation Cologne-Porz 2016 Cologne-Porz Cologne-Deutz Ulm 2015/17 Ulm Übersee (Chiemsee) Site optimisation far advanced: measures in Cologne completed; relocation to Ulm to be finalised mid 2017 Efficiency gains of approx. €10 million p.a. from 2017 onwards (higher with better capacity util
Slide 14: R&D expenditure
R&D expenditure € million 84.6 Strong commitment to continuous product innovation 62.1 Our customers and the 52.6 53.1 environment benefit from lower 50.4 fuel consumption and emissions 40.8 Expansion of product range 5.5 4.8 results in temporary R&D 3.6 3.5 4.0 3.3 increase Net R&D expenditure budg
Slide 15: Unit sales & profitability
Unit sales & profitability Thousand units 231 Volatile market environment 196 requires flexible production 179 184 Stable EBITDA margin at lower 138 unit sales 133 Ramp-up phase of new engine 10.4 9.8 generation terminated 9.4 9.0 9.0 9.1 Higher capacity utilisation most important driver for profita
Slide 16: 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 payou
Slide 17: Summary: DEUTZ key investment highlights
Summary: DEUTZ key investment highlights Successful extension of customer base Continuous growth of service revenue Expanding product range for Stage V emissions standard Well positioned for market recovery Significant improvement of profitability Sound balance sheet Stable or growing dividend 17
Slide 18: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 18
Slide 19: Key figures
Key figures FY 2016 yoy Q4 2016 yoy € million New orders 1,261.4 +2.9 % 326.1 +11.3 % Revenue 1,260.2 +1.0 % 314.7 +2.0 % EBITDA 114.2 +1.8 % 26.3 -1.1 % EBIT 23.4 +€18.5 million 3.7 +€9.4 million Net income 16.0 +€12.5 million -2.8 +€1.0 million Free cash flow 4.7 -€30.3 million 32.7 -€11.8 million
Slide 20: Sales figures
Sales figures New orders Unit sales Revenue € million Units € million +2.9 % -3.8 % +1.0 % 1,225.9 1,261.4 137,781 1,247.4 1,260.2 132,539 249.8 12,567 9,360 259.4 267.5 280.2 125,214 123,179 958.4 1,011.6 967.2 1,000.8 2015 2016 2015 2016 2015 2016 Positive price mix effects due to new emission eng
Slide 21: Revenue development
Revenue development € million +1.0 % 1,247.4 1,260.2 -5.6 % -2.2 % +12.1 % +2.0 % 318.1 300.2 352.1 344.2 308.6 314.7 268.6 301.1 Q1 Q2 Q3 Q4 FY Revenue improved over previous year in H2 2016 Q4 2016 revenue advanced 2.0 % yoy and 4.5 % qoq 2015 2016 21
Slide 22: Operating profit & net income
Operating profit & net income 2015 2016 € million 112.2 107.3 114.2 90.8 9.0 % 9.1 % 23.4 3.5 3.9 16.0 4.9 4.0 +2.6 3.5 EBITDA D&A EBIT Net Tax Net EBITDA D&A EBIT Net Income Net interest income income interest tax income expense expense Slight increase of EBITDA margin despite lower unit sales EBIT
Slide 23: EBIT
EBIT € million +1.4 -8.7 23.4 +25.8 4.9 2015 2016 EBIT margin 0.4 % 1.9 % Operating profit increase driven by segment DEUTZ Compact Engines EBIT at DEUTZ Customised Solutions improved slightly despite lower business volume Prior year result at segment Other was inflated by a positive Joint Venture v
Slide 24: Segment: DEUTZ Compact Engines
Segment: DEUTZ Compact Engines Change Q4 Q4 Change € million 2016 2015 in % € million 2016 2015 in % New orders 1,011.6 958.4 5.6 New orders 267.9 234.4 14.3 Unit sales 123,179 125,214 -1.6 Unit sales 29,869 27,618 8.2 Revenue 1,000.8 967.2 3.5 Revenue 251.1 237.1 5.9 EBIT -6.1 -31.9 80.9 EBIT -0.2
Slide 25: Segment: DEUTZ Customised Solutions
Segment: DEUTZ Customised Solutions Change Q4 Q4 Change € million 2016 2015 in % € million 2016 2015 in % New orders 249.8 267.5 -6.6 New orders 58.2 58.6 -0.7 Unit sales 9,360 12,567 -25.5 Unit sales 2,231 2,927 -23.8 Revenue 259.4 280.2 -7.4 Revenue 63.6 71.5 -11.0 EBIT 32.7 31.3 4.5 EBIT 5.1 5.3
Slide 26: R&D spending & capital expenditure
R&D spending & capital expenditure R&D expenditure Capital expenditure (excl. R&D) € million 56.8 53.5 0.6 52.9 Gross expenditure 49.5 3.1 8.7 Reimbursements Net expenditure 50.4 56.2 40.8 Net R&D 2015 2016 2015 2016 expenditure ratio(1) 3.3 % 4.0 % Net R&D expenditure in line with our guidance Capi
Slide 27: Working capital & operating cash flow
Working capital & operating cash flow Working capital Operating cash flow € million 204.3 183.6 103.3 63.8 31 Dec 2015 31 Dec 2016 2015 2016 Working capital ratio 14.7 % 16.2 % Increase of working capital ratio mainly Operating cash flow decline largely due to change in attributable to higher trade
Slide 28: Free cash flow generation & net financial position
Free cash flow generation & net financial position Free cash flow(1) Net financial position € million 39.0 35.0 31.6 4.7 2015 2016 31 Dec 2015 31 Dec 2016 Free cash flow below prior year level as a result of Net financial position remained positive lower operating cash flow (1) Free cash flow: cash
Slide 29: Equity ratio & funding
Equity ratio & funding € million 1,088.1 1,059.7 45.5 % 46.3 % 495.6 491.1 160 16 16 27 2 31 Dec 2015 31 Dec 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 Healthy balance sheet; equity ratio increased
Slide 30: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 30
Slide 31: Assessment for key end markets, 2017
Assessment for key end markets, 2017 Europe North America China Unit sales (equipment) Construction equipment 0 % to +5 % -5 % to +5 % +5 % to +10 % Material handling 0 % to +10 % -5 % to +5 % -5 % to +5 % Agricultural machinery -5 % to +5 % Medium & light duty trucks 0 % to +5 % Demand for construc
Slide 32: Financial outlook
Financial outlook FY 2016 FY 2017 € million reported guidance Revenue 1,260.2 marked increase EBIT margin (before exceptional items) 1.9 % moderate increase R&D expenditure(1) 50.4 60 - 70 Capex (excl. R&D)(1) 52.9 approx. 70 (1) Net of reimbursements R&D expenditure and capex increase due to growth
Slide 33: Financial calendar & contact details
Financial calendar & contact details Annual general meeting 4 May 2017 Q1 2017 result 9 May 2017 H1 2017 result 3 August 2017 Q1-Q3 2017 result 7 November 2017 Contact details Christian Krupp Tel:+49 (0) 221 822 5400 SVP Finance, Public and Investor Relations Fax:+49 (0) 221 822 15 5400 Ottostrasse
Slide 34: 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.