Deutz Ag · XETR:DEZ
Deutz — Investor Presentation (May 2017)
35 slides from Deutz's investor presentation, May 2017
Slide 1: DEUTZ Investor Presentation
DEUTZ Investor Presentation May 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 Cologne-Deutz 2016 Cologne-Porz I Ulm 2015/17 Ulm Übersee (Chiemsee) Site optimization in Cologne completed and far advanced at the sites in southern Germany (Ulm / Übersee) Efficiency gains of approx. €10 million p.a. from 2017 onwards (higher with better capacity uti
Slide 14: Former site in Cologne sold
Former site in Cologne sold Former industrial site in Cologne-Deutz (160,000 m2) sold to real estate developer Area close to the river Rhine will be developed to a new city district with a high proportion of housing Purchase price of around €125 million expected in 2017. Sale will lead to positive c
Slide 15: 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 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 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 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 payou
Slide 18: 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 18
Slide 19: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 19
Slide 20: Key figures
Key figures Q1 2017 yoy qoq € million New orders 403.2 +23.2 % +23.6 % Revenue 352.5 +17.4 % +12.0 % EBITDA (before exceptional items) 28.7 -€2.6 million +€2.4 million EBIT (before exceptional items) 7.6 +€0.3 million +€3.9 million Net income 15.4 +€6.7 million +€18.2 million Free cash flow 39.7 +€6
Slide 21: Sales figures
Sales figures New orders Unit sales Revenue € million Units € million +23.2% +15.7% +17.4% 403.2 37,153 76.9 1,832 352.5 327.3 32,112 300.2 58.4 67.9 2,342 64.7 326.3 35,321 259.4 29,770 294.1 235.5 Q1 2016 Q1 2017 Q1 2016 Q1 2017 Q1 2016 Q1 2017 Double digit growth of sales figures driven by DEUTZ
Slide 22: Book-to-bill ratio
Book-to-bill ratio Q1 Q4 Q3 Q2 Q1 € million 2017 2016 2016 2016 2016 New orders 403.2 326.1 258.1 349.9 327.3 Revenue 352.5 314.7 301.1 344.2 300.2 Book-to-bill ratio 1.14x 1.04x 0.86x 1.02x 1.09x Orders on hand 238.8 191.0 178.6 222.0 215.3 Sharp increase in order intake across all regions and appl
Slide 23: Operating profit & net income
Operating profit & net income Q1 2016 Q1 2017 € million 31.3 24.0 28.7 21.1 10.0 17.6 0.8 1.4 15.4 10.4% 7.3 0.9 +2.3 8.7 8.1% 7.6 EBITDA D&A EBIT Net Tax Net EBITDA D&A EBIT Excep- EBIT Net Income Net interest income income before before tional after interest taxes income expense except. except. it
Slide 24: EBIT
EBIT € million 17.6 +10.0 7.3 +3.8 -3.8 7.6 +0.3 Q1 2016 Q1 2017 Q1 2017 before before after exceptional items exceptional items exceptional items EBIT margin 2.4 % 2.2 % 5.0 % EBIT improvement at DEUTZ Compact Engines on the back of higher business volume Prior year result at DEUTZ Customised Solut
Slide 25: Segment: DEUTZ Compact Engines
Segment: DEUTZ Compact Engines Q1 Q1 Change Q1 Q4 Change € million 2017 2016 in % € million 2017 2016 in % New orders 326.3 259.4 25.8 New orders 326.3 267.9 21.8 Unit sales 35,321 29,770 18.6 Unit sales 35,321 29,869 18.3 Revenue 294.1 235.5 24.9 Revenue 294.1 251.1 17.1 EBIT (before exceptional it
Slide 26: Segment: DEUTZ Customised Solutions
Segment: DEUTZ Customised Solutions Q1 Q1 Change Q1 Q4 Change € million 2017 2016 in % € million 2017 2016 in % New orders 76.9 67.9 13.3 New orders 76.9 58.2 32.1 Unit sales 1,832 2,342 -21.8 Unit sales 1,832 2,231 -17.9 Revenue 58.4 64.7 -9.7 Revenue 58.4 63.6 -8.2 EBIT (before exceptional items)
Slide 27: R&D spending & capital expenditure
R&D spending & capital expenditure R&D Capital expenditure (excl. R&D) € million 16.9 16.0 0.4 10.8 Gross expenditure 0.7 8.6 Reimbursements 16.5 Net expenditure 10.1 Net R&D Q1 2016 Q1 2017 Q1 2016 Q1 2017 expenditure ratio(1) 3.4 % 4.7 % Higher R&D expenditure in line with guidance Guidance for FY
Slide 28: Working capital & operating cash flow
Working capital & operating cash flow Working capital Operating cash flow € million 229.4 197.1 56.2 -8.0 31 Mar 2016 31 Mar 2017 Q1 2016 Q1 2017 Working capital ratio 18.7 % 15.0 % Working capital ratio improved strongly Significant improvement of operating cash flow due to lower working capital 28
Slide 29: Free cash flow generation & net financial position
Free cash flow generation & net financial position Free cash flow(1) Net financial position € million 73.3 70.0 9.7 4.7 2016 Q1 2017 (LTM) 31 Mar 2016 31 Mar 2017 Substantial increase of free cash flow attributable Strong net financial position to good operating cash flow and sale of building lease
Slide 30: Equity ratio & funding
Equity ratio & funding € million 1,059.7 1,101.0 46.3 % 46.1 % 491.1 507.2 160 16 16 23 1 31 Dec 2016 31 Mar 2017 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 amounts to
Slide 31: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 31
Slide 32: Assessment for key end markets, 2017
Assessment for key end markets, 2017 Europe North America China Unit sales (equipment) Construction equipment +5% to +10% -5 % to +5 % +5 % to +10 % (previous: 0 % to +5 %) Material handling 0 % to +10 % -5 % to +5 % 0 % to +10 % (previous: -5 % to +5 %) Agricultural machinery -5 % to +5 % Medium &
Slide 33: 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 34: Financial calendar & contact details
Financial calendar & contact details 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 1 Email: krupp.c@deutz.com 51149 Cologne (Porz-Eil), Germany
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.