Slide 1: DEUTZ Investor Presentation
DEUTZ Investor Presentation January 2017
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 EU Stage V em
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 Q1-Q3 2016 (Q1-Q3 2015) Other 3 % Mobile Machinery 42 % €27.1 million €399.8 million (€15.7 million) (€400.9 million) Automotive 6 % €60.9 million (€64.6 million) Stationary Equipment 12 % €945.5 million (€938.8 million) €112.9 million (€135.7 million) Agricultural Machi
Slide 10: Revenue split by region
Revenue split by region Q1-Q3 2016 (Q1-Q3 2015) Africa/Middle East 5 % Europe (excl. Germany) 47 % €47.2 million €442.0 million (€68.5 million) (€438.2 million) Asia-Pacific 11 % €109.3 million (€91.3 million) €945.5 million (€938.8 million) Americas 19 % Germany 18 % €180.9 million €166.1 million (
Slide 11: 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 emission engines drives revenue growth Positive structural price mix effects are expec
Slide 12: Service business
Service business € million 283.7 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) Q1-Q3 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 339.5 319.1 318.0 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 72 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 84.6 Spending on R&D has been scaled back due to successful market launch of new engine 62.1 generation 52.6 53.1 48.7 Ongoing R&D spending for 40.8 continuous product innovation 5.5 4.8 3.6 3.5 3.9 3.3 (1) 2011 2012 2013 2014 2015 2016 Net R&D expenditure Net R&D expenditu
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 134 Ramp-up phase of new engine 10.4 9.8 generation terminated 9.4 9.0 9.0 9.3 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 payout
Slide 18: Summary: DEUTZ key investment highlights
Summary: DEUTZ key investment highlights Successful extension of customer base Continued growth of service revenue Expanding product range for Stage V emissions standard Sustainable efficiency improvement by merging facilities Robust numbers in down cycle High upside potential at market recovery Sta
Slide 19: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 19
Slide 20: Key figures
Key figures Q1-Q3 2016 yoy Q3 2016 yoy € million New orders 935.3 +0.3% 258.1 -1.6% Revenue 945.5 +0.7% 301.1 +12.1% EBITDA 87.9 +2.7% 21.0 +38.2% EBIT 19.7 +€9.1 million -1.0 +€8.7 million Net income 18.8 +€11.5 million -1.2 +€8.2 million Free cash flow -28.0 -€18.5 million -10.8 +€24.9 million 20
Slide 21: Sales figures
Sales figures New orders Unit sales Revenue € million Units € million +0.3% -6.3% +0.7% 932.9 935.3 107,236 938.8 945.5 100,439 9,640 7,129 208.9 191.6 208.7 195.8 97,596 93,310 724.0 743.7 730.1 749.7 Q1-Q3 2015 Q1-Q3 2016 Q1-Q3 2015 Q1-Q3 2016 Q1-Q3 2015 Q1-Q3 2016 New orders and revenue at previo
Slide 22: Revenue by quarter
Revenue by quarter € million 424.5 352.3 352.1 344.2 318.1 308.6 300.2 301.1 268.6 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Advance production of engines ahead of changes to European emissions standards for engines < 130 kW in October 2014 with significant influence on revenue Q3 revenu
Slide 23: Operating profit & net income
Operating profit & net income Q1-Q3 2015 Q1-Q3 2016 € million 85.6 75.0 87.9 68.2 9.1% 9.3% 19.7 2.8 +1.9 18.8 10.6 3.1 0.2 7.3 EBITDA D&A EBIT Net Income Net EBITDA D&A EBIT Net Tax Net interest taxes income interest income income expense expense EBITDA margin improved slightly despite lower unit s
Slide 24: EBIT
EBIT € million +1.6 -3.5 19.7 +11.0 10.6 Q1-Q3 2015 Q1-Q3 2016 EBIT margin 1.1% 2.1% EBIT improvement at DEUTZ Compact Engines on the back of lower production costs and better product mix Operating profit at DEUTZ Customised Solutions ahead of previous year’s level despite decrease in unit sales Res
Slide 25: Segment: DEUTZ Compact Engines
Segment: DEUTZ Compact Engines Q1-Q3 Q1-Q3 Change Q3 Q3 Change € million 2016 2015 in % € million 2016 2015 in % New orders 743.7 724.0 2.7 New orders 199.2 194.0 2.7 Unit sales 93,310 97,596 -4.4 Unit sales 28,503 26,243 8.6 Revenue 749.7 730.1 2.7 Revenue 237.2 201.8 17.5 EBIT -5.9 -16.9 65.1 EBIT
Slide 26: Segment: DEUTZ Customised Solutions
Segment: DEUTZ Customised Solutions Q1-Q3 Q1-Q3 Change Q3 Q3 Change € million 2016 2015 in % € million 2016 2015 in % New orders 191.6 208.9 -8.3 New orders 58.9 68.2 -13.6 Unit sales 7,129 9,640 -26.0 Unit sales 2,230 2,873 -22.4 Revenue 195.8 208.7 -6.2 Revenue 63.9 66.8 -4.3 EBIT 27.6 26.0 6.2 EB
Slide 27: R&D spending & capital expenditure
R&D spending & capital expenditure R&D expenditure Capital expenditure (excl. R&D) € million 41.6 40.4 36.3 38.5 0.4 Gross expenditure 2.0 6.5 Reimbursements Net expenditure 36.5 41.2 29.8 Net R&D Q1-Q3 2015 Q1-Q3 2016 Q1-Q3 2015 Q1-Q3 2016 expenditure ratio(1) 3.2% 3.9% R&D expenditure remains at m
Slide 28: Working capital & operating cash flow
Working capital & operating cash flow Working capital Operating cash flow € million 231.1 239.4 43.6 22.3 Working Q1-Q3 2015 Q1-Q3 2016 Q1-Q3 2015 Q1-Q3 2016 capital ratio (30 Sep) 17.9% 19.1% Working capital increased by €8.3 million Operating cash flow decline mainly attributable to higher working
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 16.5 2.1 -3.1 2015 Q3 2016 (LTM) Q1-Q3 2015 Q1-Q3 2016 Last twelve months free cash flow below FY 2015 Net financial position slightly positive level as a result of lower operating cash flow (1
Slide 30: Equity ratio & funding
Equity ratio & funding € million 1,088.1 1,063.8 45.5% 46.2% 495.6 491.5 160 16 16 31 1 2015 Q1-Q3 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 to 46.2% Me
Slide 31: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 31
Slide 32: Market assessment
Market assessment 2016 Unit sales (equipment)(1) Construction equipment Europe 0% to +5% (previous: -5% to +5%) Construction equipment North America -5% to 0% -15% to -10% Construction equipment China (previous: -20% to -10%) Agricultural Machinery Europe -5% to 0% +5% to +10% Automotive China(2) (p
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 33
Slide 34: Financial calendar & contact details
Financial calendar & contact details Annual report FY 2016 16 March 2017 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:
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.