Slide 1: Investor presentation August 2014
The Origin of HighTech. Investor presentation August 2014
Slide 2: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 2
Slide 3: DEUTZ at a glance
DEUTZ at a glance 150 years DEUTZ – a tradition of achievement Independent manufacturer of diesel engines with product range from 25 to 520 kw Engineering and manufacturing company with strong expertise as system integrator Profile Worldwide sales channels and service network Strong brand – synonym
Slide 4: Corporate structure
Corporate structure DEUTZ Group Revenue 2013 €1.45 billion DEUTZ Compact Engines DEUTZ Customised Solutions Revenue 2013 €1.19 billion Revenue 2013 €0.26 billion 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
Slide 5: Site optimisation
Site optimisation FY 2013 FY 2015/16 Cologne-Porz Cologne-Porz Cologne-Deutz Ulm Ulm Übersee (Chiemsee) Restructuring costs up to €20 million in FY 2014 (thereof €13.9 million booked in Q2) Capex (total amount ~€20 million in FY 2014 -16) overcompensated by proceeds from property sales in subsequent
Slide 6: DEUTZ engines for Tier 4 emission standard
DEUTZ engines for Tier 4 emission standard Competitive product features: compact size, low fuel consumption, smart exhaust after-treatment Successful combination of platform strategy with DEUTZ application expertise Full range offering with focus on engines for Mobile Machinery and Agricultural Mach
Slide 7: DEUTZ customer base
DEUTZ customer base Long standing customer relationships (not exhaustive) DEUTZ has a lot of long standing relationships with key customers Implementation of new emission standards is a window of opportunity to extend and diversify the customer base The compact design and smart New clients (not exha
Slide 8: Successful business development
Successful business development 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, telehandler, dumpers, rollers, wheel loa
Slide 9: Key applications
Key applications Typical Markets benefit from Competitors application macro trends Construction Cummins Material handling Kubota Mobile Machinery Ground support Perkins Mining equipment Yanmar Tractors Deere Agricultural Kubota Agricultural Machinery Perkins equipment Yanmar Gensets Deere Pumps Kubo
Slide 10: Revenue split by application
Revenue split by application FY 2013 (FY 2012) Other 2% Mobile Machinery 33% €30.1 million €481.6 million (€15.3 million) (€477.5 million) Stationary Equipment 12% €173.7 million (€204.2 million) €1,453.2 million (€1,291.9 million) Automotive 13%(1) €188.5 million (€192.1 million) Service 18% Agricu
Slide 11: Revenue split by region
Revenue split by region FY 2013(1) Pro-forma incl. Joint Ventures, FY 2013(2) (FY 2012) (FY 2012) Africa/Middle East 5% Europe (excl. Germany) 57% Africa/Middle East 4% Europe (excl. Germany) 43% €70.4 million €824.6 million €70.4 million €824.6 million (€83.9 million) (€668.3 million) (€83.9 millio
Slide 12: Emission standards drive DEUTZ revenue growth
Emission standards drive DEUTZ revenue growth Average sales price per engine (indexed; FY 2011 = 100) Tier 4 systems require exhaust 117 aftertreatment devices 100 104 Growing share of new emission engines drives revenue growth Positive price mix effects are expected to continue in the next years. E
Slide 13: Service business
Service business € million 253.7 Strong resilience of profitable 241.6 250.3 service business through 215.8 different economic cycles 175.0 Higher complexity of new emission engines provides opportunity to increase penetration of service business 20% 18% 16% 20% 18% Active management of service netw
Slide 14: DEUTZ activities in China
DEUTZ activities in China(1) Joint venture with FAW Group 50-50 JV (at-equity consolidation) DEUTZ Dalian (DDE) Revenue FY 2013: €319m (+30% yoy) Production of 3-8 litre diesel engines Automotive and other applications New joint venture with AB Volvo DEUTZ stake 65% (full consolidation) DEUTZ Engine
Slide 15: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 15
Slide 16: Key figures H1 2014
Key figures H1 2014 H1 2014 yoy Q2 2014 qoq € million Order intake 746.8 -11.5% 332.6 -19.7% Revenue 753.4 +13.8% 410.7 +19.8% EBITDA (before one-offs) 67.5 +21.0% 42.1 +65.7% EBIT (before one-offs) 20.1 +99.0% 18.2 >100% Net financial debt 31.8 -29.2% 31.8 -10.4% Strong revenue growth and improveme
Slide 17: Highlights
Highlights ■ Successful new business development - superior product features of Tier 4 engines TCD 2.9 & 3.6 continue to attract new customers, e.g. Hitachi (Japan) and TYM (Korea) ■ Sales expanded significantly in Q2 due to strong demand for smaller engines (< 130 kW) before the upcoming emission l
Slide 18: Sales figures
Sales figures Order intake Unit sales Revenue € million Units € million -11.5% 15.3% 13.8% 843.5 746.8 99,079 753.4 143.0 6,144 134.7 85,907 662.1 118.8 6,775 115.8 700.5 92,935 634.6 612.1 79,132 546.3 H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 Double-digit growth in unit sales and revenue Ord
Slide 19: EBIT (before one-offs)
EBIT (before one-offs) € million 20.1 18.2 10.1 7.2 14.3 16.2 1.9 0.2 10.5 0.5 5.6 7.1 -5.5 -4.9 -0.6 -0.3 H1 2013 H1 2014 Q1 2014 Q2 2014 EBIT margin 1.5% 2.7% 0.6% 4.4% Operating profit nearly doubled due to higher production level Substantial improvement of profitability at DEUTZ Compact Engines
Slide 20: Operating profit & net income
Operating profit & net income H1 2013 H1 2014 € million 67.5 47.4 55.8 45.7 20.1 13.9 10.1 0.0 10.1 2.6 2.1 5.4 6.2 3.3 0.2 2.7 EBITDA D&A EBIT Restruc- EBIT Interest Income Net EBITDA D&A EBIT Restruc- EBIT Interest Income Net before before turing after expenses taxes income before before turing af
Slide 21: R&D spending & capital expenditure
R&D spending & capital expenditure R&D Capital expenditure (excl. R&D) € million 34.6 36.2 Gross expenditure Reimbursements 7.9 10.5 20.1 19.9 Net expenditure 1.7 0.9 26.7 25.7 18.4 19.0 H1 2013 H1 2014 H1 2013 H1 2014 Net R&D expenditure 4.0% 3.4% ratio(1) Improvement of R&D ratio in line with budg
Slide 22: Working capital & operating cash flow
Working capital & operating cash flow Working capital Operating cash flow € million 204.0 169.3 49.0 40.9 H1 2013 H1 2014 H1 2013 H1 2014 Working capital ratio 13.3% 13.2% (30 June) Working capital increase driven by higher Operating cash flow decreased by €8.1 million due business volume to higher
Slide 23: Free cash flow generation & net financial position
Free cash flow generation & net financial position Free cash flow Net financial position € million H1 2013 H1 2014 19.3 13.8 -31.8 -44.9 2013 H1 2014 (LTM) Free cash flow improved despite higher working Cash flow used to pay dividend of €8.5 million and to capital reduce net debt by €13.1 million yo
Slide 24: Equity ratio & funding
Equity ratio & funding € million 1,121.0 1,183.5 45.0% 41.4% 504.7 489.6 204 15 14 19 FY 2013 H1 2014 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 Sound balance sheet with strong equity ratio Medium- to lon
Slide 25: Segments: DEUTZ Compact Engines
Segments: DEUTZ Compact Engines H1 H1 Change Q2 Q1 Change € million 2014 2013 in % € million 2014 2014 in % New orders 612.1 700.5 -12.6 New orders 267.5 344.6 -22.4 Unit sales 92,935 79,132 17.4 Unit sales 51,279 41,656 23.1 Revenue 634.6 546.3 16.2 Revenue 347.8 286.8 21.3 EBIT (before one-offs) 5
Slide 26: Segments: DEUTZ Customised Solutions
Segments: DEUTZ Customised Solutions H1 H1 Change Q2 Q1 Change € million 2014 2013 in % € million 2014 2014 in % New orders 134.7 143.0 -5.8 New orders 65.1 69.6 -6.5 Unit sales 6,144 6,775 -9.3 Unit sales 3,343 2,801 19.4 Revenue 118.8 115.8 2.6 Revenue 62.9 55.9 12.5 EBIT (before one-offs) 14.3 16
Slide 27: Summary: key financial development
Summary: key financial development Successful new business development Double digit growth in revenue and unit sales Significant operating profit improvement at DCE Sound development of DEUTZ Dalian R&D and Capex well under control Sustainable efficiency improvement by site optimisation 27
Slide 28: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 28
Slide 29: Financial outlook
Financial outlook FY 2013 reported Guidance FY 2014 € million low double Revenue 1,453.2 digit %-growth EBIT margin (before one-offs) 3.3 % > 4.0 % EBIT margin (after one-offs) 3.3 % > 3.0 % Net R&D spending ratio(1) 3.6 % slight decline Net capex (excl. R&D)(1) 42.5 50 - 60 (1) Net of reimbursement
Slide 30: Financial calendar & contact details
Financial calendar & contact details Interim report 1st to 3rd quarter 2014 6 November 2014 Annual report 2014 19 March 2015 Annual general meeting 29 April 2015 Contact details Christian Krupp Tel:+49 (0) 221 822 5400 Ottostrasse 1 Fax:+49 (0) 221 822 15 5400 51149 Cologne (Porz-Eil) Email: krupp.c
Slide 31: 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.