Slide 1: DEUTZ AG Investor presentation – power in motion
DEUTZ AG Investor presentation – power in motion April 2013
Slide 2: Agenda
Agenda DEUTZ at a glance Strategy & investment rationale Financials Outlook
Slide 3: DEUTZ at a glance
DEUTZ at a glance Founded in 1864 by Nicolaus August Otto - the inventor of the four-stroke engine Independent manufacturer of diesel engines with product range from 25 to 520 kw Profile Production capacity of 300,000 engines p.a. (additional capacity of Joint Ventures 250,000 engines p.a.) Engineer
Slide 4: Corporate structure
Corporate structure DEUTZ Group Revenue 2012 €1.3bn DEUTZ Compact Engines DEUTZ Customised Solutions Revenue 2012 €1.0bn Revenue 2012 €0.3bn 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 Liq
Slide 5: Product portfolio: ready for the next emission levels
Product portfolio: ready for the next emission levels Engines for Tier 4 emissions standards Focus on Mobile Machinery and Agriculture Award winning new engine Mobile Agricultural Stationary Auto- (TC)D 2.9 Very compact engine minimizes Machinery Machinery Equipment motive 25 – 56 kW installation ef
Slide 6: Key applications
Key applications Typical Markets benefit from Competitors(1) application macro trends Construction Cummins Ground support Kubota Mobile Machinery Material handling Perkins Mining equipment Yanmar Tractors Deere Agricultural Kubota Agricultural Machinery Perkins equipment Yanmar Gensets Deere Pumps K
Slide 7: Revenue split
Revenue split Revenue split by application, 2012 Revenue split by region, 2012(1) (2011) (2011) Other 1% Mobile Machinery 37% Africa/Middle East 6% Europe (excl. Germany) 52% €15.3 million €477.5 million €83.9 million €668.3 million (€76.0 million) (€529.4 million) (€87.8 million) (€860.6 million) S
Slide 8: Pro-forma revenue split
Pro-forma revenue split Revenue split by region (incl. Joint Ventures), 2012(1) (figures in brackets: reported IFRS revenue) Approx. €350 million revenue Africa/Middle East 5% (6%) Rest of Europe (ex. Germany) 40% (52%) generated by 50-50 Joint Ventures, mainly in China (at equity consolidated; reve
Slide 9: Agenda
Agenda DEUTZ at a glance Strategy & investment rationale Financials Outlook
Slide 10: Structural growth drivers
Structural growth drivers Product and new business development generating business opportunities New emission standards require more complex engines with a higher value New production facilities in China will lead to significant growth in Asia in the coming years Industry Emission Emerging Total rev
Slide 11: Successful new business development projects
Successful new business development projects Examples of new applications New customers gained in all regions, in particular with new engines 2.9 and 3.6 Greater share of wallet at existing clients New business related to different applications, e.g. tractors, fork lifts, telehandlers, dumpers, roll
Slide 12: Service business
Service business € million 241.6 250.3 Growth of service revenue 212.0 215.8 supported by ongoing projects and 203.5 network extension (e.g. Madrid 179.7 175.0 and Moscow) Active management of service network with improved training and tools Increased engine complexity beneficial for service busines
Slide 13: Emission standards
Emission standards Tier 4 systems require exhaust aftertreatment devices SCR-CAT DEUTZ product portfolio ready for emission level Tier 4 final Higher value of new emission engines DEUTZ owns the certification for the whole system (i.e. electroni- cally governed diesel engine with exhaust aftertreatm
Slide 14: Growth activities in China
Growth activities in China Planned DEUTZ Engine DEUTZ Dalian WEIFANG WEICHAI- JV with AB Volvo Shandong (DES) Engine (DDE) DEUTZ Engine City (Province) Linyi (Shandong) Linyi (Shandong) Dalian (Liaoning) Weifang (Shandong) JV Partner AB Volvo Shandong Changlin FAW Group Weichai Holding DEUTZ shareho
Slide 15: Agenda
Agenda DEUTZ at a glance Strategy & investment rationale Financials Outlook
Slide 16: Key figures FY 2012
Key figures FY 2012 2012 yoy € million Revenue 1,291.9 -15.5% EBIT 38.5 -57.8% Net income 21.0 -72.2% Free cash flow 12.6 +162.5% Net financial debt 48.6 -30.2% Equity ratio (%) 46.8 +5.5%-pts Stronger balance sheet and free cash flow despite challenging market environment 16
Slide 17: Strategic highlights FY 2012
Strategic highlights FY 2012 Cost reduction, efficiency enhancement and review of value chain - Further measures to boost efficiency implemented; e.g. overhead costs reduced - Established structures under review, e.g. outsourcing of pipe manufacturing to optimise value chain - Divestment of JV Bosch
Slide 18: Sales figures
Sales figures Order intake Unit sales Revenue € million Units € million -16.4% -22.5% -15.5% 1,479.3 230,598 1,529.0 305.1 1,237.1 26,437 178,774 329.9 1,291.9 16,875 286.9 276.5 1,174.2 204,161 1,199.1 161,899 960.6 1,005.0 2011 2012 2011 2012 2011 2012 Sales decline caused by weaker markets in Eur
Slide 19: EBIT
EBIT 91.2 € million 46.5 38.5 7.5 47.2 46.6 13.9 3.0 13.3 12.5 6.7 -2.5 -8.6 -6.1 -15.6 -0.9 2011 2012 Q3 2012 Q4 2012 EBIT margin 6.0% 3.0% 1.0% 4.3% Profitability mainly impacted by volume decline; improvement in Q4 Profit contribution of Joint Ventures was a burden for EBIT in 2012 Series start o
Slide 20: R&D spending and capital expenditure
R&D spending and capital expenditure R&D Capital expenditure (excl. R&D) € million Gross expenditure 109.8 Reimbursements 25.2 82.7 69.0 Net expenditure 20.6 2.6 44.9 84.6 3.8 62.1 66.4 41.1 2011 2012 2011 2012 Net R&D ratio(1) 5.5% 4.8% R&D spending scaled back according to plan due to Increase of
Slide 21: Net financial position and working capital
Net financial position and working capital Net financial position Working capital € million 142.1 141.6 2011 2012 2011 2012 Working -48.6 capital ratio 9.3% 11.0% -69.6 (31 Dec) Net financial position improved by €21.0 million yoy Working capital at previous year level Free cash flow €12.6 million (
Slide 22: Financial strength and funding
Financial strength and funding € million 1,099.0 1,041.7 1,026.4 35.9% 41.3% 46.8% 453.5 480.1 374.3 204 1 7 41 2010 2011 2012 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 (residual term) New unsecured credit line of €160 million r
Slide 23: Agenda
Agenda DEUTZ at a glance Strategy & investment rationale Financials Outlook
Slide 24: Financial outlook
Financial outlook FY 2012 reported Guidance FY 2013 € million Revenue 1,291.9 > 1,400 EBIT margin (%) 3.0 > 3.0 Net R&D expenditure(1) 62.1 ~ 55 Net capex (excl. R&D)(1) 66.4 60 - 70 (1) Net of reimbursements Results improvement expected in FY 2013 Order intake in January and February 2013 improved
Slide 25: Unit sales assumptions for DEUTZ key markets
Unit sales assumptions for DEUTZ key markets 2013 Mobile Machinery Europe flat North America 0 – 10% China > 10% Agricultural Machinery Europe flat Automotive Europe flat China > 10% Challenging market conditions in Europe expected to continue Revenue will grow faster than unit sales due to higher i
Slide 26: Financial calendar & contact details
Financial calendar & contact details Annual General Meeting Cologne 30 April 2013 Interim report 1st quarter 2013 8 May 2013 Interim report 1st half 2013 8 August 2013 Interim report 1st to 3rd quarter 2013 7 November 2013 Contact details Christian Krupp Tel:+49 (0) 221 822 5400 Ottostrasse 1 Fax:+4
Slide 27: 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.