Deutz Ag · XETR:DEZ
Deutz — Q3 2008 Earnings Presentation
35 slides from Deutz's earnings presentation, Nov 7, 2008
Slide 1: Conference Call Q1 – Q3 2008
CONFERENCE CALL Q1 – Q3 2008 7 November 2008
Slide 2: Agenda
Agenda Overview Q1 – Q3 2008 Dr Helmut Leube, Chairman of the Management Board Key financials Q1 – Q3 2008 Helmut Meyer, Chief Financial Officer Outlook and action programme Dr Helmut Leube, Chairman of the Management Board Appendix Conference Call Q1 – Q3 2008 7 November 2008 2
Slide 3: DEUTZ overview Q1 – Q3 2008
DEUTZ overview Q1 – Q3 2008 Rapidly deteriorating market environment since mid-2008 - Financial crisis is clearly affecting real economy - Pace of economic downturn almost unprecedented - Very cautious approach amongst DEUTZ’s customers: sharp fall in new orders and cancellations of existing order
Slide 4: DEUTZ overview: new orders
DEUTZ overview: new orders € million -5.3% -15.5% 1,215.4 1,150.9 292.0 276.6 923.4 874.3 381.0 321.8 99.2 83.5 281.8 238.3 Q1-Q3 2007 Q1-Q3 2008 Q3 2007 Q3 2008 Economic downturn is affecting DEUTZ’s business environment, especially in compact engines Sharp fall in new orders in Q3 reflecting v
Slide 5: New orders by application segment
New orders by application segment Q1-Q3 2008 (Q1-Q3 2007/ change in %) Other €12.5 million (+15.7%) Mobile Machinery €393.7 million (-17.4%) Service €162.6 million (+6.1%) €1,150.9 million Agricultural (€1,215.4 million) Machinery €155.1 million (+45.6%) Automotive €189.3 million (-11.3%) Stationary
Slide 6: DEUTZ overview: unit sales
DEUTZ overview: unit sales +0.5% -18.1% 206,410 207,491 25,100 24,107 181,310 183,384 71,791 10,006 58,804 61,785 7,543 51,261 Q1-Q3 2007 Q1-Q3 2008 Q3 2007 Q3 2008 Unit sales flat after 9 months; supported by volume growth in H1 Q3: fall in unit sales, especially in compact engines < 4 litres
Slide 7: DEUTZ overview: revenue
DEUTZ overview: revenue € million +7.2% -7.4% 1,180.3 1,100.7 257.9 238.1 383.0 354.8 922.4 862.6 88.6 84.9 294.4 269.9 Q1-Q3 2007 Q1-Q3 2008 Q3 2007 Q3 2008 Increase in revenue resulting from positive development in H1 Decline in Q3 most pronounced in Mobile Machinery (construction equipment, m
Slide 8: DEUTZ overview: revenue by region
DEUTZ overview: revenue by region Q1-Q3 2008 (Q1-Q3 2007 / change in %) Africa/Middle East €58.1 million (-1.9%) Germany Asia-Pacific €282.7 million (+21.3%) €86.9 million (-1.8%) €1,180.3 million (€1,100.7 million) Americas €145.3 million (-7.3%) Rest of Europe €607.3 million (+7.8%) Conference Cal
Slide 9: Compact Engines: segment overview
Compact Engines: segment overview € million Q1-Q3 Q1-Q3 Change € million Q3 Q3 Change 2008 2007 (%) 2008 2007 (%) New orders 874.3 923.4 -5.3 New orders 238.3 281.8 -15.4 Unit sales (no.) 183,384 181,310 1.1 Unit sales (no.) 51,261 61,785 -17.0 Revenue 922.4 862.6 6.9 Revenue 269.9 294.4 -8.3 EBIT 9
Slide 10: Compact Engines: revenue by application segment
Compact Engines: revenue by application segment Q1-Q3 2008 (Q1-Q3 2007 / change in %) Other €12.9 million Mobile Machinery (+2.4%) €380.9 million (-0.3%) Service €76.9 million (+15.6%) €922.4 million Agricultural (€862.6 million) Machinery €132.8 million (+51.9%) Stationary Equipment Automotive €141
Slide 11: DEUTZ Customised Solutions: segment overview
DEUTZ Customised Solutions: segment overview € million Q1-Q3 Q1-Q3 Change € million Q3 Q3 Change 2008 2007 (%) 2008 2007 (%) New orders 276.6 292.0 -5.3 New orders 83.5 99.2 -15.8 Unit sales (no.) 24,107 25,100 -4.0 Unit sales (no.) 7,543 10,006 -24.6 Revenue 257.9 238.1 8.3 Revenue 84.9 88.6 -4.2 E
Slide 12: DEUTZ Customised Solutions: revenue by application segment
DEUTZ Customised Solutions: revenue by application segment Q1-Q3 2008 (Q1-Q3 2007 / change in %) Agricultural Machinery Service €7.6 million (-49.3%) €84.6 million (+2.4%) Other €13.2 (+6.5%) €257.9 million Automotive (€238.1 million) €35.8 million (+18.5%) Stationary Equipment Mobile Machinery €61.
Slide 13: Agenda
Agenda Overview Q1 – Q3 2008 Dr Helmut Leube, Chairman of the Management Board Key financials Q1 – Q3 2008 Helmut Meyer, Chief Financial Officer Outlook and action programme Dr Helmut Leube, Chairman of the Management Board Appendix Conference Call Q1 – Q3 2008 7 November 2008 13
Slide 14: Financial overview Q1 – Q3 2008
Financial overview Q1 – Q3 2008 EBIT and net income impacted by decline in unit sales – especially of compact engines in Q3 – and higher cost of materials Further improvement in net interest expense Cash flow from operating activities grew to €77.2 million (-€111.2 million) Positive net fina
Slide 15: Key financials: EBIT
Key financials: EBIT € million -38.2% -99.0% 71.0 5.6 31.3 43.9 -0.3 30.6 2.5 34.1 35.2 13.5 14.6 9.0 0.3 Q1-Q3 2007 Q1-Q3 2008 Q3 2007 12.9 Q3 2008 -11.8 -0.8 EBIT margin 6.5%*) 3.7%*) 8.0% 0.1% *) excl. one-offs: 5.5% 4.3% Compact Engines DEUTZ Customised Solutions Other Conference Call Q1 – Q3 20
Slide 16: Impact of start-up costs incurred by DEUTZ Dalian Engines
Impact of start-up costs incurred by DEUTZ Dalian Engines EBIT (€ million) Q1-Q3 Q1-Q3 Change 2008 2007 (%) Compact Engines incl. DDE 9.0 34.1 -73.6 DEUTZ Dalian Engines (DDE) -7.0 -2.2 -- Compact Engines excl. DDE 16.0 36.3 -55.9 EBIT (€ million) Q3 Q3 Change 2008 2007 (%) Compact Engines incl. DDE
Slide 17: Key financials: net financial position and working capital
Key financials: net financial position and working capital € million Net financial position Working capital 89.7 263.1 242.9 196.9 37.0 25.6 30 Sept 31 Dec 30 Sept 30 Sept 31 Dec 30 Sept 2007 2007 2008 2007 2007 2008 WC ratio 12.8% 13.3% 15.0% Positive net financial position after payment of (aver
Slide 18: Key financials: R&D and capital expenditure
Key financials: R&D and capital expenditure € million R&D Capital expenditure +62.5% -27.3% 60.6 119.3**) 7.8 6.3 52.8 113.0**) 86.7 37.3 10.9 6.4 75.8 30.9 Q1-Q3 2007 Q1-Q3 2008 Q1-Q3 2007 Q1-Q3 2008 R&D ratio*) 3.4% 5.1% *) ratio of R&D spending to revenue **) incl. capex for DDE: €58 million Comp
Slide 19: Agenda
Agenda Overview Q1 – Q3 2008 Dr Helmut Leube, Chairman of the Management Board Key financials Q1 – Q3 2008 Helmut Meyer, Chief Financial Officer Outlook and action programme Dr Helmut Leube, Chairman of the Management Board Appendix Conference Call Q1 – Q3 2008 7 November 2008 19
Slide 20: Global economic growth has slowed significantly
Global economic growth has slowed significantly The sharp deterioration in economic conditions as a result of the global financial crisis has become increasingly evident during 2008 Global GDP growth is expected to slow significantly in 2009, leading to a downturn in Europe and the USA % year on
Slide 21: Outlook reflecting rapidly changing global market conditions
Outlook reflecting rapidly changing global market conditions Outlook 2008 Unit sales (DEUTZ Group) ~ 260,000 Revenue growth (%) up by as much as 2% EBIT margin (%) ~ 2% R&D (€ million) 90 Unit sales (DEUTZ Dalian) ~ 100,000 Revenue (DEUTZ Dalian, € million) ~ 240 Î Reliability of forecast impacted b
Slide 22: DEUTZ prepares its business to withstand tough market conditions
DEUTZ prepares its business to withstand tough market conditions Challenges DEUTZ's action programme The financial crisis is now affecting the Improve profitability in new engines business real economy. Ensure that major new products are launched The effects of current market trends over the
Slide 23: Key aspects of DEUTZ's action programme
Key aspects of DEUTZ's action programme Improve profitability of new engines business - Cut costs (cost of materials and general administration costs) - Adjust pricing to appropriate level Ensure that major new products are launched over the next three years - Invest selectively in DEUTZ's futur
Slide 24: Agenda
Agenda Overview Q1 – Q3 2008 Dr Helmut Leube, Chairman of the Management Board Key financials Q1 – Q3 2008 Helmut Meyer, Chief Financial Officer Outlook and action programme Dr Helmut Leube, Chairman of the Management Board Appendix Conference Call Q1 – Q3 2008 7 November 2008 24
Slide 25: Key financial data
Key financial data € million Q1-Q3 2008 Q1-Q3 2007 Change (%) Revenue 1,180,3 1,100.7 7.2 EBITDA 97.9 119.6 -18.1 EBIT 43.9 71.0 -38.2 EBIT margin before one-off items (%) 3.7 6.5 -- Net income on continuing operations 28.0 35.6 -21.3 Basic earnings per share (€) 0.23 0.31 -25.8 Number of employees
Slide 26: Key balance sheet figures
Key balance sheet figures € million 30 Sep 2008 31 Dec 2007 Change (%) Total assets 1,333.8 1,378.6 -3.2 Equity 546.5 557.1 -1.9 Equity ratio (%) 41.0 40.4 -- Cash flow from operating activities (continuing operations) 77.2 -38.7 -- Net financial position 25.6 89.7 -71.5 Working capital 242.9 196.9
Slide 27: Income statement
Income statement (€ million) Q1-Q3 2008 Q1-Q3 2007 Change (%) Revenue 1,180.3 1,100.7 7.2 Changes in inventories and other own work capitalised 38.4 42.9 -10.5 Other operating income 46.6 52.4 -11.1 Cost of materials -828.3 -763.0 8.6 Staff costs -219.4 -205.7 6.7 Depreciation and amortisation -54.0
Slide 28: Balance sheet: assets
Balance sheet: assets 30 Sept 31 Dec Change Assets (€ million) 2008 2007 (%) Non-current assets (before deferred tax assets) 535.8 511.3 4.8 Deferred tax assets 45.7 49.4 -7.5 Inventories 247.8 214.2 15.7 Trade receivables 159.9 188.8 -15.3 Other receivables and assets 97.0 102.9 -5.7 Cash and cash
Slide 29: Balance sheet: equity and liabilities
Balance sheet: equity and liabilities 30 Sept 31 Dec Change Equity and liabilities (€ million) 2008 2007 (%) Equity 546.5 557.1 -1.9 Provisions for pensions and other post-retirement benefits 170.4 176.7 -3.6 Other provisions 49.0 46.5 5.4 Financial liabilities 215.7 216.0 -0.1 Other liabilities 2.0
Slide 30: Cash flow statement (condensed)
Cash flow statement (condensed) Q1-Q3 Q1-Q3 € million 2008 2007 EBIT 43.9 71.0 Cash flow from operating activities (continuing operations) 77.2 -111.2 Cash flow from operating activities (discontinued operations) - -9.1 Cash flow from operating activities (total) 77.2 -120.3 Capital expenditure on i
Slide 31: Segment overview Q1 – Q3 2008
Segment overview Q1 – Q3 2008 New orders (€ million) Q1-Q3 Q1-Q3 Change Unit sales (no.) Q1-Q3 Q1-Q3 Change 2008 2007 (%) 2008 2007 (%) Compact Engines 874.3 923.4 -5.3 Compact Engines 183,384 181,310 1.1 DEUTZ Customised Solutions 276.6 292.0 -5.3 DEUTZ Customised Solutions 24,107 25,100 -4.0 Total
Slide 32: Segment overview Q3 2008
Segment overview Q3 2008 New orders (€ million) Q3 Q3 Change Unit sales (no.) Q3 Q3 Change 2008 2007 (%) 2008 2007 (%) Compact Engines 238.3 281.8 -15.4 Compact Engines 51,261 61,785 -17.0 DEUTZ Customised Solutions 83.5 99.2 -15.8 DEUTZ Customised Solutions 7,543 10,006 -24.6 Total 321.8 381.0 -15.
Slide 33: Financial calendar 2009
Financial calendar 2009 Annual Results Press Conference Cologne 19 March 2009 Publication of annual report for 2008 Annual Results Analysts' Meeting Frankfurt/Main 20 March 2009 Annual General Meeting Cologne 30 April 2009 Interim report on Q1 2009 7 May 2009 Conference call with analysts an
Slide 34: Contact
Contact DEUTZ AG Sandra Siegele Investor Relations Ottostrasse 1 51149 Cologne (Porz-Eil) Germany Tel.: +49 (0)221 822 2492 Fax: +49 (0)221 822 2498 www.deutz.com Conference Call Q1 – Q3 2008 7 November 2008 34
Slide 35: Disclaimer
Disclaimer 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. Such discrepancies may be caused by changes in political, economic or business conditions, a decrea