Deutz Ag · XETR:DEZ
Deutz — Investor Presentation (May 2018)
39 slides from Deutz's investor presentation, May 2018
Slide 1: DEUTZ Investor Presentation
DEUTZ Investor Presentation May 2018
Slide 2: Agenda
AGENDA About DEUTZ Strategy & market positioning Financials Outlook © DEUTZ AG 2
Slide 3: Our roots and our future – pioneers in engineering
Our roots and our future – pioneers in engineering ■ Founded in 1864 in Cologne, DEUTZ is the world's oldest engine company and one of the world's leading independent engine manufacturers ■ Otto, Langen, Daimler, Bugatti, Maybach – these pioneers of engine technology all worked for DEUTZ ■ DEUTZ is
Slide 4: What we do – our markets
What we do – our markets DEUTZ is the leading independent manufacturer of diesel and gas engines in the power range from 19 to 620 kW for off-highway applications – we are developing the technologies today for the demands of tomorrow. © DEUTZ AG 4
Slide 5: New trends – paradigm shift
New trends – paradigm shift ■ Public perception of diesel engines is undergoing a paradigm shift: There is a need, and demand, for energy savings and cleaner motorisation ■ There are calls from the media and politicians for diesel engines to be taken off the market and replaced with electrified driv
Slide 6: Our vision – leading in innovative drive systems
Our vision – leading in innovative drive systems ■ DEUTZ is on track to become a leading provider of INNOVATIVE DRIVE SYSTEMS, playing its part in reducing emissions such as pollution, noise and CO2. The DEUTZ road map for achieving this vision: DIESEL is here to stay, its future secured by its hi
Slide 7: Agenda
AGENDA About DEUTZ Strategy & market positioning Financials Outlook © DEUTZ AG 7
Slide 8: Our strategy – a new dynamic
Our strategy – a new dynamic INNOVATIVE DRIVE SYSTEMS High-tech Diesel Engines Alternative Fuels Long term future for many off- Liquid gas (LPG) Hybrid systems highway applications Compressed natural gas Electric systems Pioneering role of DEUTZ in (CNG) reducing emissions Fully integr
Slide 9: High-tech diesel engines – current engine portfolio
High-tech diesel engines – current engine portfolio Competitive product features: compact size, low fuel consumption, smart exhaust after-treatment DEUTZ is the 1st engine manufacturer to obtain certification for the EU Stage V emissions standard This delivers on the promise that the current e
Slide 10: Extended range of products
Extended range of products Enlarged product offering in the lower output range New gas and bi-fuel engines Extended product range in the upper output range (200 to 620 kW) Start of series production in 2019 Start of serial supply in 2019 © DEUTZ AG 10
Slide 11: Electrification
O Example applications Electrification DEUTZ position Electric and hybrid solutions have not Competitive solutions for yet made inroads into off-highway selected applications markets − Reduced TCO DEUTZ has established expertise in all relevant technological fields (e-motors, − Lower noise emi
Slide 12: Torqeedo acquisition
Torqeedo acquisition Torqeedo DEUTZ acquired the global market leader in electric drive systems for boats and a specialist in integrated electric drive systems Torqeedo is an innovative catalyst for the E-DEUTZ strategy Bringing hybrid and full-electric drive systems to market more quickly tha
Slide 13: Revenue by region
Revenue by region 2017 (2016) Africa/Middle East 4 % Europe (excl. Germany) 49 % €53.7 million €725.5 million (€62.3 million) (€588.6 million) Asia-Pacific 10 % €147.5 million €1,479.1 million (€147.9 million) (€1,260.2 million) Americas 18 % Germany 19 % €268.1 million €284.3 million (€239.6 millio
Slide 14: Revenue by application
Revenue by application 2017 (2016) Other 2 % Construction Equipment 30 % €28.3 million €437.4 million (€32.9 million) (€350.0 million) Automotive 4 % €56.1 million (€77.2 million) Stationary Equipment 10 % €1,479.1 million Service 21 % €152.0 million (€1,260.2 million) €309.2 million (€147.3 million
Slide 15: Customer base extended successfully
Customer base extended successfully Long-standing customer relationships New clients & greater share of wallet (not exhaustive) (not exhaustive) © DEUTZ AG 15
Slide 16: Service business
Service business € million 309.2 278.4 287.3 Profitable service business 259.3 showing resilience throughout the economic cycle Expansion of service business − New products − Digitalization − Investment in own service centers & acquisition of selected dealers 2014 2015 2016 2017 Continuous gro
Slide 17: Investment in sales & service network
Investment in sales & service network Acquisition of Italian dealer IML Motori including its Romanian subsidiary Italian sales and service network now trading under the name DEUTZ Italy The acquisition strengthens our profitable service business Investing in service network © DEUTZ AG 17
Slide 18: Site optimisation completed
Site optimisation completed Efficiency gains of approx. €10 million p.a. (will be higher with improved capacity utilisation) Cologne-Porz Cologne-Deutz Cologne-Porz I Ulm Übersee (Chiemsee) Ulm I Substantial proceeds from property sale of former Cologne-Deutz site: • Purchase price of around €
Slide 19: Cash deployment & dividend policy
Cash deployment & dividend policy Investment focus on innovation, service and internationalization Internal Electrification strategy – E-DEUTZ funding Service – acquisition of selected dealers Financial Keep equity ratio above 40 % strength Robust financial framework in volatile markets Di
Slide 20: Key investment highlights
Key investment highlights Leading manufacturer of drive-systems for off-highway applications E-DEUTZ – electrification strategy with M&A accelerator Diesel engines with growing potential for outsourcing Resilient and expanding service business Financial strength for organic and inorganic growth Furt
Slide 21: Agenda
AGENDA About DEUTZ Strategy & market positioning Financials Outlook © DEUTZ AG 21
Slide 22: Key messages
Key messages ■ Strong start to the 2018 financial year • Exceptional high volume of new orders • Marked revenue growth • Substantial improvement of profitability ■ Review of carrying amounts at JV DEUTZ Dalian • DEUTZ engaged an audit firm to review strategic options for the joint venture • Accordin
Slide 23: Key figures
Key figures Q1 2018 yoy qoq € million New orders 574.9 +42.6% +50.2% Revenue 414.5 +17.6% +7.4% EBITDA (before exceptional items) 40.9 +42.5% -9.9% EBIT (before exceptional items) 21.7 +185.5% +48.6% Net income 18.2 +€2.8 million -€81.7 million Free cash flow -9.1 -€48.8 million -€17.2 million Dyn
Slide 24: Sales figures
Sales figures New orders Unit sales Revenue € million Units € million +42.6% +30.4% +17.6% 574.9 48,458 403.2 414.5 37,153 352.5 Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 Organic revenue growth amounts to 15.0% Torqeedo sold 2.133 electric drive system in Q1 2018 © DEUTZ AG 24
Slide 25: Book-to-bill ratio
Book-to-bill ratio Q1 Q4 Q3 Q2 Q1 € million 2018 2017 2017 2017 2017 New orders 574.9 382.7 370.8 399.8 403.2 Revenue 414.5 385.9 358.7 382.0 352.5 Book-to-bill ratio 1.39x 0.99x 1.03x 1.05x 1.14x Orders on hand 427.5 270.9 265.1 253.9 238.8 Strong increase in order intake across all regions and o
Slide 26: Operating profit & net income
Operating profit & net income Q1 2017 Q1 2018 € million 40.9 19.2 28.7 21.1 21.7 0.6 2.9 10.0 17.6 0.8 1.4 18.2 15.4 7.6 EBITDA D&A EBIT Excep- EBIT Net Income Net EBITDA D&A EBIT Net Income Net before before tional after interest taxes income interest taxes income except. except. items except. expe
Slide 27: EBIT (before exceptional items)
EBIT (before exceptional items) € million 21.7 7.7 7.6 17.0 6.4 1.5 -0.3 -3.0 Q1 2017 Q1 2018 EBIT margin 2.2 % 5.2 % Substantial EBIT improvement driven by higher business volume at DEUTZ Compact Engines EBIT margin at DEUTZ Customised Solutions amounts to 13.3% (Q1 2017: 11.0%) Operating res
Slide 28: DEUTZ Compact Engines
DEUTZ Compact Engines Q1 Q1 Change Q1 Q4 Change € million 2018 2017 in % € million 2018 2017 in % New orders 492.9 326.3 51.1 New orders 492.9 321.1 53.5 Unit sales (units) 44,563 35,321 26.2 Unit sales (units) 44,563 39,724 12.2 Revenue 352.0 294.1 19.7 Revenue 352.0 319.9 10.0 EBIT (before except.
Slide 29: DEUTZ Customised Solutions
DEUTZ Customised Solutions Q1 Q1 Change Q1 Q4 Change € million 2018 2017 in % € million 2018 2017 in % New orders 76.7 76.9 -0.3 New orders 76.7 56.8 35.0 Unit sales (units) 1,762 1,832 -3.8 Unit sales (units) 1,762 2,408 -26.8 Revenue 57.7 58.4 -1.2 Revenue 57.7 62.3 -7.4 EBIT (before except. items
Slide 30: R&D spending & capital expenditure
R&D spending & capital expenditure R&D expenditure Capital expenditure (excl. R&D) € million 19.4 16.9 0.7 Gross expenditure 0.4 13.7 Reimbursements 8.6 Net expenditure 16.5 18.7 Net R&D Q1 2017 Q1 2018 Q1 2017 Q1 2018 expenditure ratio(1) 4.7% 4.5% R&D increased in line with guidance Capex incr
Slide 31: Working capital & operating cash flow
Working capital & operating cash flow Working capital Operating cash flow € million 260.0 197.1 56.2 10.1 31 Mar 2017 31 Mar 2018 Q1 2017 Q1 2018 Working capital ratio 15.0% 16.9% Working capital increased by €62.9 million mainly Operating cash flow decline attributable to higher due to higher b
Slide 32: Free cash flow generation & net financial position
Free cash flow generation & net financial position Free cash flow(1) Net financial position € million 88.9 82.5 70.0 33.7 2017 Q1 2018 (LTM) 31 Mar 2017 31 Mar 2018 Free cash flow decline due to lower operating Net financial position increased by €18.9 million cash flow (1) Free cash flow: cash
Slide 33: Equity ratio & funding
Equity ratio & funding € million 1,258.0 1,101.0 49.0% 46.1% 616.4 507.2 160 16 16 8 1 31 Mar 2017 31 Mar 2018 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 line Strong balance sheet; equity ratio amounts to 49.
Slide 34: Agenda
AGENDA About DEUTZ Strategy & market positioning Financials Outlook © DEUTZ AG 34
Slide 35: Forecast for key end-customer markets, 2018
Forecast for key end-customer markets, 2018 Europe North America China Unit sales (equipment) Construction Equipment +5% to +10% +5% to +10% +10% to +20% Material Handling +5% to +10% +5% to +10% +10% to +20% Agricultural Machinery 0% to +5% 0% to +5% -5% to 0% Medium & Light-Duty Trucks 0% to +5% ©
Slide 36: Financial outlook
Financial outlook FY 2017 FY 2018 reported guidance € million Revenue 1,479.1 marked increase EBIT margin (before exceptional items)(1) 2.9 % moderate increase R&D expenditure(2) 67.0 70 - 75 Capex (excl. R&D)(2) 54.7 60 - 70 (1) Subject to final results of review of carrying amounts at JV DEUTZ Dal
Slide 37: Financial calendar & contact details
Financial calendar & contact details H1 2018 results 2 August 2018 Q1-Q3 2018 results 8 November 2018 FY 2018 results 14 March 2019 ► 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: chris
Slide 38: 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.
Slide 39: Thank you for your attention
THANK YOU FOR YOUR ATTENTION © DEUTZ AG 39