Deutz Ag · XETR:DEZ
Deutz — Investor Presentation (August 2017)
36 slides from Deutz's investor presentation, August 2017
Slide 1: DEUTZ Investor Presentation August 2017
DEUTZ Investor Presentation August 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 H1 2017 (H1 2016) Other 2 % Construction Equipment 29 % €12.1 million €211.7 million (€19.8 million) (€172.1 million) Automotive 4 % €29.2 million (€41.6 million) Stationary Equipment 10 % €734.5 million Service 21 % (€644.4 million) €77.9 million €154.9 million (€77.7 m
Slide 9: Revenue split by region
Revenue split by region H1 2017 (H1 2016) Africa/Middle East 3 % Europe (excl. Germany) 48 % €25.2 million €354.1 million (€29.5 million) (€304.6 million) Asia-Pacific 10 % €70.9 million (€71.8 million) €734.5 million (€644.4 million) Americas 19 % Germany 20 % €141.0 million €143.3 million (€127.6
Slide 10: Site optimisation
Site optimisation Cologne-Porz Cologne-Deutz 2016 Cologne-Porz I Ulm Übersee (Chiemsee) 2015/17 Ulm I Site optimization completed on schedule Efficiency gains of approx. €10 million p.a. from 2017 onwards (higher with better capacity utilisation) Sustainable efficiency improvement by merging facilit
Slide 11: 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 12: Investment focus
Investment focus Investment in technology, innovation and internationalisation Enlarged product portfolio – power range and alternative fuels (e.g. gas engines) E-DEUTZ strategy: review of new business opportunities through electification (start-stop technique, hybrid drive, partial electrification,
Slide 13: 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 Payout ~30 % o
Slide 14: Emissions standards drive revenue growth
Emissions standards drive revenue growth Average sales price per engine (indexed; FY 2011 = 100) 131 130 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
Slide 15: Service business
Service business € million 309.8 278.4 287.3 Strong resilience of profitable 250.3 253.7 259.3 service business through different economic cycles Expansion of service business with new engine-related products and services. Active approach in dealer management and training Investments in own service
Slide 16: Activities in China
Activities in China JV DEUTZ Dalian Countrywide sales and service 359.8 network 339.5 319.1 303.0 293.8 DEUTZ Dalian manufactures diesel engines compliant to 245.7 Chinese emissions standards First Automotive Works is our 107 106 Joint Venture partner and key 89 75 account for light & medium duty 68
Slide 17: R&D expenditure
R&D expenditure € million 62.1 62.0 Continuous product innovation 52.6 53.1 Our customers and the 50.4 environment benefit from lower 40.8 fuel consumption and emissions Expansion of product range 4.8 results in temporary R&D 4.0 4.2 increase 3.6 3.5 3.3 Net R&D expenditure budget for 2017: €60-70 m
Slide 18: Unit sales & profitability
Unit sales & profitability Thousand units Volatile market environment 196 requires flexible production 179 184 159 Gross margin improvement 138 despite lower unit sales 133 Higher capacity utilisation most important driver for profitability 17.3 17.9 enhancement 13.5 13.5 15.4 13.2 (1) 2012 2013 201
Slide 19: Summary: DEUTZ key investment highlights
Summary: DEUTZ key investment highlights Benefitting from market recovery Successful extension of customer base Continuous growth of service revenue Expanding product range for Stage V emissions standard Significant improvement of profitability Available funds for organic and inorganic growth Stable
Slide 20: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 20
Slide 21: Key figures
Key figures H1 2017 yoy Q2 2017 yoy € million New orders 803.0 +18.6% 399.8 +14.3% Revenue 734.5 +14.0% 382.0 +11.0% EBITDA (before exceptional items) 64.7 -3.3% 36.0 +1.1% EBIT (before exceptional items) 22.8 +10.1% 15.2 +13.4% Net income 19.8 -1.0% 4.4 -61.1% Free cash flow 53.8 +€71.0 million 14.
Slide 22: Sales figures
Sales figures New orders Unit sales Revenue € million Units € million +18.6% +14.2% +14.0% 803.0 79,599 734.5 677.2 141.4 69,706 4,117 644.4 120.9 132.7 4,899 131.9 661.6 75,482 544.5 64,807 613.6 512.5 H1 2016 H1 2017 H1 2016 H1 2017 H1 2016 H1 2017 Double-digit growth of sales figures driven by DE
Slide 23: Revenue by quarter
Revenue by quarter € million 382.0 352.1 344.2 352.5 308.6 300.2 301.1 314.7 268.6 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 2017 revenue increased 11.0% yoy and 8.4% qoq 23
Slide 24: Operating profit & net income
Operating profit & net income H1 2016 H1 2017 € million 66.9 46.2 64.7 41.9 4.1 26.9 1.4 5.7 20.7 2.0 +1.3 20.0 22.8 19.8 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. items excep
Slide 25: EBIT
EBIT € million 26.9 +9.5 -9.8 22.8 +4.1 20.7 +2.4 H1 2016 H1 2017 H1 2017 before before after exceptional items exceptional items exceptional items EBIT margin 3.2 % 3.1 % 3.7 % EBIT improvement at DEUTZ Compact Engines due to higher business volume Prior year result at DEUTZ Customised Solutions wa
Slide 26: Segment: DEUTZ Compact Engines
Segment: DEUTZ Compact Engines H1 H1 Change Q2 Q2 Change € million 2017 2016 in % € million 2017 2016 in % New orders 661.6 544.5 21.5 New orders 335.3 285.1 17.6 Unit sales 75,482 64,807 16.5 Unit sales 40,161 35,037 14.6 Revenue 613.6 512.5 19.7 Revenue 319.5 277.0 15.3 EBIT (before exceptional it
Slide 27: Segment: DEUTZ Customised Solutions
Segment: DEUTZ Customised Solutions H1 H1 Change Q2 Q2 Change € million 2017 2016 in % € million 2017 2016 in % New orders 141.4 132.7 6.6 New orders 64.5 64.8 -0.5 Unit sales 4,117 4,899 -16.0 Unit sales 2,285 2,557 -10.6 Revenue 120.9 131.9 -8.3 Revenue 62.5 67.2 -7.0 EBIT (before exceptional item
Slide 28: R&D spending & capital expenditure
R&D spending & capital expenditure R&D expenditure Capital expenditure (excl. R&D) € million 31.8 30.0 0.8 24.1 Gross expenditure 1.4 18.3 Reimbursements 31.0 Net expenditure 22.7 Net R&D H1 2016 H1 2017 H1 2016 H1 2017 expenditure ratio(1) 3.5% 4.2% Higher R&D expenditure in line with guidance due
Slide 29: Working capital & operating cash flow
Working capital & operating cash flow Working capital Operating cash flow € million 227.1 185.2 85.2 15.4 30 Jun 2016 30 Jun 2017 H1 2016 H1 2017 Working capital ratio 18.6% 13.7% Tight working capital management Strong operating cash flow driven by business Significant improvement of working capita
Slide 30: Free cash flow generation & net financial position
Free cash flow generation & net financial position Free cash flow(1) Net financial position € million 75.7 74.8 13.1 4.7 2016 Q2 2017 (LTM) 30 Jun 2016 30 Jun 2017 Substantial increase of free cash flow Net financial position improved by €61.7 million Free cash flow in Q2 2017 amounted to +€14.1 mil
Slide 31: Equity ratio & funding
Equity ratio & funding € million 1,059.7 1,101.6 46.3% 45.4% 491.1 500.4 160 16 16 19 1 31 Dec 2016 30 Jun 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 Strong balance sheet; equity ratio amounts to 45.
Slide 32: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 32
Slide 33: Assessment for key end markets, 2017
Assessment for key end markets, 2017 Europe North America China Unit sales (equipment) Construction equipment +5 % to +10 % 0 % to +5 % +20 % to +30 % (previous: -5 % to +5 %) (previous: +5 % to +10 %) Material handling +5 % to +10 % +5 % to +10 % +20 % to +30 % (previous: 0 % to +10 %) (previous: -
Slide 34: 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 35: Financial calendar & contact details
Financial calendar & contact details Q1-Q3 2017 result 7 November 2017 Annual report 2017 14 March 2018 Annual general meeting 26 April 2018 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@de
Slide 36: 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.