Deutz Ag · XETR:DEZ
Deutz — Investor Presentation (March 2016)
35 slides from Deutz's investor presentation, March 2016
Slide 1: DEUTZ Investor Presentation
DEUTZ Investor Presentation March 2016
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 Stage V ready: DEUTZ engines with diesel particle filter up to 7.8 litre capacity already meet the next EU emissions standard announced for 201
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 customers attracted by the New clients & greater share of wallet (not exhaustive) 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 FY 2015 (FY 2014) Other 2 % Mobile Machinery 42 % €20.5 million €523.2 million (€36.9 million) (€715.3 million) Automotive 7 % €87.9 million (€82.0 million) Agricultural Machinery 13 % €1,247.4 million (€1,530.2 million) €159.3 million (€257.5 million) Stationary Equipme
Slide 10: Revenue split by region
Revenue split by region FY 2015 (FY 2014) Africa/Middle East 8 % Europe (excl. Germany) 47 % €95.5 million €585.5 million (€84.7 million) (€744.7 million) Asia-Pacific 10 % €127.6 million €1,247.4 million (€107.4 million) (€1,530.2 million) Americas 22 % Germany 13 % €275.3 million €163.5 million (€
Slide 11: Emissions standards drive revenue growth
Emissions standards drive revenue growth Average sales price per engine (indexed; FY 2011 = 100) 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 expected
Slide 12: Service business
Service business € million 278.4 259.3 Further solid service revenue 250.3 253.7 growth 241.6 Strong resilience of profitable service business through different economic cycles 2011 2012 2013 2014 2015 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 Strategic decision to focus our 273.5 production in China on our JV 245.7 DEUTZ Dalian (DDE) which has sufficient capacities DDE is a 50:50 JV with FAW 100 107 106 producing diesel engine
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 Spending on R&D has been 84.6 scaled back due to successful market launch of new engine generation 62.1 52.6 53.1 Ongoing R&D spending in 40.8 continuous product innovation 5.5 4.8 3.6 3.5 3.3 2011 2012 2013 2014 2015 Net R&D expenditure Net R&D expenditure ratio (%) R&D ex
Slide 16: EBITDA & free cash flow
EBITDA & free cash flow € million Volatile market environment 159.0 requires flexible production 142.0 137.4 121.7 Successful reduction of break 112.2 even level in recent years Strong free cash flow generation attributable to successful market 52.0 launch of new engine generation 35.0 Higher capaci
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 Structural growth due to tighter emissions standards Continued growth of service revenue Sustainable efficiency improvement by merging facilities Robust numbers in down cycle High upside potential at market recovery Stabl
Slide 19: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 19
Slide 20: Key figures
Key figures FY 2015 yoy Q4 2015 qoq € million New orders 1,225.9 -11.1% 293.0 +11.7% Revenue 1,247.4 -18.5% 308.6 +14.9% EBITDA (before one-off items) 112.2 -18.3% 26.6 +75.0% EBIT (before one-off items) 4.9 -€26.8 million -5.7 +€4.0 million Net income 3.5 -€16.0 million -3.8 +€5.6 million Free cash
Slide 21: Sales figures
Sales figures New orders Unit sales Revenue € million Units € million -11.1% -29.8% -18.5% 196,403 1,530.2 1,379.0 13,278 250.3 1,225.9 1,247.4 264.0 137,781 267.5 280.2 12,567 183,125 1,279.9 1,115.0 125,214 967.2 958.4 2014 2015 2014 2015 2014 2015 Sales figures dampened by advance production of e
Slide 22: Revenue development
Revenue development € million 410.1 410.7 424.5 342.7 352.3 352.1 318.1 308.6 268.6 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Advance production of engines ahead of changes to European emissions standards for engines < 130 kW in October 2014 with significant influence on revenue Higher c
Slide 23: Operating profit & net income
Operating profit & net income 2014 2015 € million 137.4 105.7 112.2 107.3 9.0% 9.0% 31.7 18.9 +12.8 19.5 12.8 6.1 4.9 0.0 4.9 4.0 +2.6 3.5 EBITDA D&A EBIT One-off EBIT Interest Income Net EBITDA D&A EBIT One-off EBIT Interest Income Net before before items after expenses taxes income before before i
Slide 24: EBIT (before one-off items)
EBIT (before one-off items) € million +7.8 31.7 +12.5 -47.1 4.9 2014 2015 EBIT margin 2.1% 0.4% Operating profit at DEUTZ Compact Engines adversely affected by lower business volume and low capacity utilisation of Chinese Joint Venture DEUTZ Dalian EBIT improvement at DEUTZ Customised Solutions main
Slide 25: Segment: DEUTZ Compact Engines
Segment: DEUTZ Compact Engines Change Q4 Q3 Change € million 2015 2014 in % € million 2015 2015 in % New orders 958.4 1,115.0 -14.0 New orders 234.4 194.0 20.8 Unit sales 125,214 183,125 -31.6 Unit sales 27,618 26,243 5.2 Revenue 967.2 1,279.9 -24.4 Revenue 237.1 201.8 17.5 EBIT (before one-off item
Slide 26: Segment: DEUTZ Customised Solutions
Segment: DEUTZ Customised Solutions Change Q4 Q3 Change € million 2015 2014 in % € million 2015 2015 in % New orders 267.5 264.0 1.3 New orders 58.6 68.2 -14.1 Unit sales 12,567 13,278 -5.4 Unit sales 2,927 2,873 1.9 Revenue 280.2 250.3 11.9 Revenue 71.5 66.8 7.0 EBIT (before one-off items) 31.3 18.
Slide 27: R&D spending & capital expenditure
R&D spending & capital expenditure R&D Capital expenditure (excl. R&D) € million Gross expenditure 68.7 15.6 56.8 Reimbursements 49.5 0.6 8.7 42.7 Net expenditure 2.4 53.1 56.2 40.8 40.3 Net R&D 2014 2015 2014 2015 expenditure ratio(1) 3.5% 3.3% R&D decline in line with our guidance after all Net ca
Slide 28: Working capital & operating cash flow
Working capital & operating cash flow Working capital Operating cash flow € million 196.2 183.6 114.1 103.3 Working 2014 2015 2014 2015 capital ratio (31 Dec) 12.8% 14.7% Increase of working capital ratio related to lower revenue and higher inventories 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 52.0 35.0 39.0 13.7 2014 2015 2014 2015 Significant positive free cash flow despite lower Positive net financial position (+€25.3 million yoy) business volume (1) Free cash flow: cash flow from oper
Slide 30: Equity ratio & funding
Equity ratio & funding € million 1,149.2 1,088.1 44.5% 45.5% 511.0 495.6 160 15 16 43 1 2014 2015 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 Equity ratio improved to 45.5% (+1.0%-points) Medium- to long-t
Slide 31: Agenda
Agenda DEUTZ strategy & positioning Financials Outlook 31
Slide 32: Market assessment
Market assessment 2016 Unit sales (equipment)(1) Construction equipment Europe -5% to +5% Construction equipment North America -5% to +5% Construction equipment China -20% to -10% Agricultural Machinery Europe -5% to 0% Automotive China -5% to +5% Recovery of key application markets not yet visible
Slide 33: Financial outlook
Financial outlook FY 2015 FY 2016 € million reported guidance Revenue 1,247.4 stagnant or slight increase EBIT margin (before one-off items) 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 EBIT margin uplift supported by
Slide 34: Financial calendar & contact details
Financial calendar & contact details Annual General Meeting 28 April 2016 Interim management statement 1st quarter 2016 3 May 2016 Interim report 1st half 2016 4 August 2016 Interim management statement 1st to 3rd quarter 2016 8 November 2016 Contact details Christian Krupp Tel:+49 (0) 221 822 5400
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.