Deutz Ag · XETR:DEZ
Deutz — FY2019 Earnings Presentation
36 slides from Deutz's earnings presentation, Mar 18, 2020
Slide 1: DEUTZ Full-Year 2019
DEUTZ Full-Year 2019 March 18, 2020
Slide 2: 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.
Slide 3: Agenda: Operational highlights and strategy
Agenda Agenda Operational highlights and strategy Dr. Frank Hiller | Chairman of the Board of Management 3
Slide 4: Operational highlights
Operational highlights DEUTZ meets its 2019 targets for revenue and EBIT margin ▪ Consolidated revenue rises by 3.5% to €1,840.8 million, in line with the updated forecast of more than €1.8 billion, with strong revenue growth in the Americas (+10.7%) and Asia-Pacific (+7.6%) ▪ EBIT margin before exc
Slide 5: Strategic highlights
Strategic highlights Progress of growth strategy in China with revenue target1 of around half a billion Euros in 2022 ▪ Closing of Joint venture agreement2 with SANY, China’s biggest construction equipment group ▪ Production of around 75,000 engines in 2022/additional growth potential expected ▪ Int
Slide 6: Expansion and focused implementation of the strategy
Expansion and focused implementation of the strategy Acquisition of development services provider Futavis in Q4/2019 2022 5–10% of revenue ▪ Strengthens DEUTZ's expertise in electronics, software, battery technology, generated by electrified and battery testing and in matters of functional safety dr
Slide 7: Expansion of the profitable service business
Expansion of the profitable service business Strategic initiatives for sustained service growth Service business revenue € million New sales channels ▪ Expansion of the DEUTZ-Webshop and integration of external platforms ▪ Expansion of direct business with fleet operators and major customers CAGR +6
Slide 8: 'Taking Responsibility' – DEUTZ's sustainability strategy
'Taking Responsibility' – DEUTZ's sustainability strategy ‘‘ Our objective: To strive for commercial success while fulfilling our corporate, social, and environmental responsibilities. ▪ Groupwide sustainability strategy, called ‘Taking Responsibility’, implemented in 2019 ▪ Sets various targets for
Slide 9: Sales figures
Sales figures New orders Unit sales Revenue € million Units € million −15.3% −1.4% +3.5% 214,776 211,667 1,778.8 1,840.8 1,952.6 1,654,3 2018 2019 2018 2019 2018 2019 ▪ Since the end of Q2 2019, new orders have reflected a weakening of demand as a result of the economic climate; strong prior-year pe
Slide 10: Revenue by region
Revenue by region1 2019 (2018) Africa and Middle East 3% (3%) Europe (excl. Germany) 42% (42%) €54.4 million €776.8 million +3.6% +4.0% Asia-Pacific 16% (15%) €1,840.8 million (€1,778.8 million) €294.6 million +7.6% Americas 22% (21%) Germany 17% (19%) €404.3 million €310.7 million +10.7% −8.8% Stro
Slide 11: Revenue by application segment
Revenue by application segment1 2019 (2018) Miscellaneous 6% (6%) Construction Equipment 29% (31%) €104.9 million €535.5 million +1.9% −1.8% Stationary Equipment 8% (9%) Material Handling 22% (21%) €1,840.8 million €155.8 million (€1,778.6 million) €398.9 million −6.3% +6.9% Agricultural Machinery 1
Slide 12: Agenda: Key financials in detail
Agenda Agenda Key financials in detail Dr. Andreas Strecker | Chief Financial Officer 12
Slide 13: EBIT
EBIT EBIT and EBIT margin EBIT and EBIT margin ▪ Operating profit (EBIT before exceptional items) down € million by 3.9% to €78.8 million before exceptional items € million ▪ EBIT margin before exceptional items down by 30 bps to 4.3% +7.4% | +20 bps -3.9% | -30bps ▪ Excluding non-recurring effects,
Slide 14: Operating profit and net income
Operating profit and net income 2018 2019 € million € million 166.2 87.4 161.4 79.4 1.9 9.3 88.1 13.0 82.0 10.2 78.8 22.8 69.9 52.3 EBITDA D&A EBIT Net financial Income Net income EBITDA D&A EBIT Except. EBIT Net financial Income Net income expense taxes before before items expense taxes except. exc
Slide 15: DEUTZ Compact Engines (DCE)
DEUTZ Compact Engines (DCE) € million 2019 2018 Change € million Q4 2019 Q4 2018 Change (%) (%) New orders 1,268.4 1,638.2 -22.6 New orders 248.9 326.0 -23.7 Unit sales (units) 164,677 195,259 -15.7 Unit sales (units) 42,039 54,225 -22.5 Revenue 1,446.4 1,484.0 -2.5 Revenue 366.7 398.8 -8.0 EBIT 57.
Slide 16: DEUTZ Customized Solutions (DCS)
DEUTZ Customized Solutions (DCS) € million 2019 2018 Change € million 2019 2018 Change (%) (%) New orders 341.7 286.0 +19.5 New orders 74.5 70.7 +5.4 Unit sales (units) 26,048 9,259 +181.3 Unit sales (units) 5,896 2,766 +113.2 Revenue 362.5 271.2 +33.7 Revenue 86.0 79.4 +8.3 EBIT 42.8 32.9 +30.1 EBI
Slide 17: R&D spending and capital expenditure
R&D spending and capital expenditure R&D expenditure (after deducting grants) Capital expenditure2 € million € million 5.2% 4.8% 86.5 95.8 85.0 59.1 2018 2019 2018 2019 R&D ratio1 ▪ R&D expenditure increases as expected due to new engine projects ▪ Net R&D expenditure capitalized in 2019: €21.7 mill
Slide 18: Working capital and cash flow from operating activities
Working capital and cash flow from operating activities Working capital Cash flow from operating activities € million € million 17.4% 15.8% 115.6 293.2 276.2 97.5 Dec. 31, 2018 Dec. 31, 2019 2018 2019 Working capital ratio (average)1 ▪ Increase in working capital primarily due to decrease in trade l
Slide 19: Free cash flow and net financial position
Free cash flow and net financial position Free cash flow1 Net financial position € million € million 93.7 14.5 -15.2 -36.6 2018 2019 Dec. 31, 2018 Dec. 31, 2019 ▪ Deterioration in free cash flow attributable to the rise in net cash used for investing activities, which was driven partly by the paymen
Slide 20: Equity ratio and funding
Equity ratio and funding Equity ratio Funding € million € million Long-term bank loans Lease liabilities 1,249.3 1,301.2 49.6% 50.1% 160.0 619.1 652.4 16.1 13.1 23.9 5.4 4.9 Dec. 31, 2018 Dec. 31, 2019 up to 1yr 2–5 yrs up to 1yr 1-5 yrs over 5 yrs Total equity and liabilities Equity Equity ratio Re
Slide 21: Agenda: Dividend proposal and outlook
Agenda Agenda Dividend proposal and outlook Dr. Frank Hiller | Chairman of the Board of Management 21
Slide 22: Dividend proposal
Dividend proposal Dividend per share € 0.15 0.15 2018 20191 ▪ Continuation of consistent dividend policy ▪ The objective is for a payout ratio of around 30% of net income over a multi-year period ▪ Dividend yield based on the year-end 2019 closing price: 2.7% 1 Subject to approval by the AGM. 22
Slide 23: Group forecast for 2020
Group forecast for 2020 2019 Forecast for 2020 Revenue €1,840.8 million Low double-digit percentage decline compared with prior year EBIT margin 4.3% Mid double-digit percentage decline compared with (before exceptional items) prior year R&D expenditure1 €95.8 million €80 million to €90 million Cape
Slide 24: Forecast for key end customer markets in 2020
Forecast for key end customer markets in 2020 YoY change in unit sales (%) Europe North America China Construction Equipment1 -5 to 0% -10 to -5% -15 to -5% Material Handling1 -5 to +5% 0 to +5% 0 to +5% Agricultural Machinery2 -5 to 0% 0 to +5% -10 to -5% ▪ Marked differences in the performance of
Slide 25: Growth needed to achieve the medium-term objectives for 2022
Growth needed to achieve the medium-term objectives for 2022 Revenue EBIT margin before exceptional items € million % 7-8 > 150 > 2.000 1,840.8 ~21 4,3 Revenue Growth Revenue EBIT margin Growth EBIT margin 2019 initiatives 2022 2019 initiatives 2022 ▪ EBIT margin 2019 excluding costs for growth init
Slide 26: Annex
DEUTZ Annex
Slide 27: Summary of key financials
Summary of key financials € million 2019 2018 Change (%) EBITDA 175.5 161.4 +8.7 EBITDA margin (%) 9.5 9.1 +40 bps EBIT (before exceptional items) 78.8 82.0 -3.9 EBIT (before exceptional items) margin (%) 4.3 4.6 -30 bps Equity ratio (%) 50.1 49.6 +50 bps Free cash flow1 -36.6 14.5 − Net financial p
Slide 28: Overview of segments
Overview of segments New orders 2019 2018 Change Revenue 2019 2018 Change € million (%) € million (%) DEUTZ Compact Engines 1,268.4 1,638.2 -22.6 DEUTZ Compact Engines 1,446.4 1,484.0 -2.5 DEUTZ Customized Solutions 341.7 286.0 +19.5 DEUTZ Customized Solutions 362.5 271.2 +33.7 Other 47.8 31.6 +51.3
Slide 29: Income statement
Income statement € million 2019 2018 Change (%) Revenue 1,840.8 1,778.8 +3.5 Cost of sales -1,510.5 -1,468.3 +2.9 Research and development costs -95.3 -92.0 +3.6 Selling and administrative expenses -151.8 -145.7 +4.2 Other operating income 29.0 40.6 -28.6 Other operating expenses -24.3 -17.7 +37.3 W
Slide 30: Balance sheet: assets
Balance sheet: assets € million Dec. 31, 2019 Dec. 31, 2018 Change (%) Non-current assets (before deferred tax assets) 619.5 506.2 +22.4 Deferred tax assets 68.6 75.9 -9.6 Non-current assets 688.1 582.1 +18.2 Inventories 321.7 333.5 -3.5 Trade receivables 152.1 157.3 -3.3 Other receivables and asset
Slide 31: Balance sheet: equity and liabilities
Balance sheet: equity and liabilities € million Dec. 31, 2019 Dec. 31, 2018 Change (%) Equity 652.4 619.1 +5.4 Provisions for pensions and other post-retirement benefits 151.2 152.8 -1.0 Deferred tax liabilities 0.8 0.5 +60.0 Other provisions 33.4 36.2 -7.7 Financial debt 34.1 19.3 +76.7 Other liabi
Slide 32: Cash flow statement (condensed)
Cash flow statement (condensed) € million 2019 2018 EBIT 88.1 82.0 Cash flow from operating activities 115.6 97.5 Capital expenditure on intangible assets, property, plant and equipment and investments -145.6 -90.1 Acquisition of subsidiaries -8.0 0.0 Proceeds from the sale of non-current assets 4.2
Slide 33: DEUTZ's Sustainability Vision for 2023 at a glance
DEUTZ's Sustainability Vision for 2023 at a glance Occupational Corporate Product Personnel Supplier Environmental and health and governance and stewardship development management climate protection11 safety compliance ▪ Increase the ▪ Maintain the current level of employee ▪ Improve the ▪ Increase
Slide 34: Financial calendar and contact details
Financial calendar and contact details Financial calendar Q1/2020 results May 7, 2020 H1/2020 results August 11, 2020 Q1-Q3/2020 results November 10, 2020 Contact Leslie Isabelle Iltgen SVP Communications & Investor Relations +49 (0)221 822 3600 leslie.iltgen@deutz.com 34
Slide 35: Questions & answers
DEUTZ Questions & answers
Slide 36: Thank you for your attention!
Thank you for your attention!