Deutz Ag · XETR:DEZ
Deutz — Investor Presentation (February 2019)
37 slides from Deutz's investor presentation, February 2019
Slide 1: DEUTZ Investor presentation February 2019
DEUTZ Investor presentation February 2019
Slide 2: Agenda
Agenda DEUTZ at a glance Strategy & market position Financials Outlook 2
Slide 3: DEUTZ at a glance
DEUTZ at a glance 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 ■ Founded in 1864 in Cologne, DEUTZ is the world's oldest engine company
Slide 4: DEUTZ offers a broad range of engines
DEUTZ offers a broad range of engines Expanded product offering in the Start of series production in 2019 lower output range New gas and bi-fuel engines Expansion of product portfolio in the upper output range (200 to 620 kW) Start of serial supply in 2019 Expansion of product portfolio for
Slide 5: DEUTZ is present in more than 130 countries worldwide
DEUTZ is present in more than 130 countries worldwide Production & service network Production & assembly Xchange centre Sales company Service centre >800 sales & service partners 5
Slide 6: DEUTZ is successfully expanding customer base worldwide
DEUTZ is successfully expanding customer base worldwide Long-standing customer relationships New customers & greater share of wallet (not exhaustive) (not exhaustive) 6
Slide 7: Agenda
Agenda DEUTZ at a glance Strategy & market position Financials Outlook 7
Slide 8: DEUTZ is well on track to become a leading provider of innovative drive systems
DEUTZ is well on track to become a leading provider of innovative drive systems Combustion Alternative drives on the rise engines here to stay Hybrid & electric, hybrid, gas, synthetic & bi-fuels Reduction of complexity ,CO2 optimisation ~200,000 units 5-10% share of revenue per year expected from e
Slide 9: E-DEUTZ Electrification strategy
E-DEUTZ Electrification strategy Acquisition of Torqeedo (Sep 2017) is paying off Successful know-how transfer – DEUTZ saves 5 years development time First prototype after 6 months Marketable hybrid and full-electric products expected at end of 2019 / early 2020 DEUTZ has taken on a pionee
Slide 10: E-DEUTZ Electrification strategy
E-DEUTZ Electrification strategy Electrification strategy is as “door opener” for new customers ≥ DEUTZ has established expertise in all relevant technological fields (e-motors, power electronics, battery technology, systems integration etc.) DEUTZ offers a modular kit solution for customer-sp
Slide 11: DEUTZ performance programme: Further increase in revenue
DEUTZ performance programme Further increase in revenue > €2.0 billion 2022 > €1.6 billion €1.26 billion 2018 2016 Key drivers Growth of core business: Expansion of product Expansion of service Regional growth: expanded portfolio of portfolio: business: improve market position in the combustion engi
Slide 12: DEUTZ performance programme: Further improvement in profitability
DEUTZ performance programme Further improvement in profitability 7-8% 2022 ≥4.5% 2018 1.9% 2016 Key drivers Operational excellence: Investments in product Expansion of service Growth in core business and Optimise global production portfolio: business: regions: and sourcing network, better e.g. Torqe
Slide 13: Expansion of service business
Expansion of service business € million Service business showing resilience >400 throughout the economic cycle 309.2 Expansion of service business 278.4 287.3 259.3 • New products • Best-in-class availability of spare parts • Optimised repair concepts (e.g. Xchange engines) • Direct connection t
Slide 14: Digitalisation: From data to value
Digitalisation “From data to value” Where? Production Sales Service Administration Quality How? Improve efficiency DEUTZ as a “learning organisation” Data processing & analysis & customer loyalty 14
Slide 15: Regional growth strategy
Regional growth strategy Off-highway market 2017 Americas offers growth potential with full-electric, hybrid, gas and in thousand units 1,738 bi-fuel drives. Focus on strengthening market position in the USA EMEA: further development of OEMs, increase market penetration with innovative drive sys
Slide 16: China growth strategy
China growth strategy Three-pillar strategy China`s biggest construction HORIZON is the largest First diesel engine company equipment group rental company for material in China handling in China Large customer Contract manufacturing Service partner cooperation Joint venture partner P
Slide 17: Financial strength
Financial strength ► Equity ratio to remain >40% Strong balance sheet ► Medium- to long-term financing with undrawn facilities available ► Firepower for acquitisitions available Potential acquisitions ► Focus on innovation, service & internationalisation ► Payout ratio ~30% of recurring profit over
Slide 18: Key investment highlights
Key investment highlights Well on track to become a leading provider of innovative drive systems Leading position in the development of electrification solutions for off-highway applications Successful expansion of customer base worldwide Strongly growing service business to enhance resilien
Slide 19: Agenda
Agenda DEUTZ at a glance Strategy & market position Financials Outlook 19
Slide 20: Highlights
Highlights ■ Strong Q1-Q3 2018 performance • Sharp order growth (+31.9% yoy) • Double-digit revenue increase (+18.7% yoy) • Ongoing growth in all regions and segments • Substantial improvement of operating profit: EBIT (before exceptional items) +71.9% yoy • Good Q3 result despite strike at supplier
Slide 21: Key figures
Key figures (1) Q1-Q3 2018 yoy Q3 2018 yoy € million New orders 1,548.7 +31.9% 452.2 +22.0% Revenue 1,297.3 +18.7% 419.7 +17.0% Adjusted EBIT(2) 60.3 +115.4% 12.8 +146.2% EBIT (before exceptional items) 45.9 +71.9% 12.5 +150.0% Net income 35.6 +76.2% 10.3 +586.7% (1) 2017 figures restated (2) EBIT (
Slide 22: Sales figures
Sales figures New Orders Unit Sales Revenue € million Units € million +31.9% +32.3% +18.7% 1,548.7 156,504 1,297.3 1,173.8 118,279 1,093.2 Q1-Q3 2017 Q1-Q32018 Q1-Q3 2017 Q1-Q3 2018 Q1-Q3 2017 Q1-Q3 2018 Torqeedo sold 8,977 electric drive systems in Q1-Q3 2018 Unit sales grew faster than revenue
Slide 23: Revenue by quarter
Revenue by quarter € million 463.1 414.5 419.7 382.0 385.9 352.5 358.7 301.1 314.7 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Double-digit revenue growth in Q3 yoy despite strike at a supplier 23
Slide 24: Revenue by region
Revenue by region Strong growth supported by all regions Q1-Q3 2018 (Q1-Q3 2017) Africa/Middle East 3 % Europe (excl. Germany) 49 % €37.7 million €641.9 million (€36.4 million) (€530.0 million) Asia-Pacific 9 % €113.7 million €1,297.3 million (€109.3 million) (€1,093.2 million) Americas 20 % Germany
Slide 25: Revenue by application
Revenue by application Substantial revenue growth in all off-highway applications Q1-Q3 2018 (Q1-Q3 2017) Other 3 % Construction Equipment 30 % €37.6 million €395.3 million (€18.6 million) (€322.2 million) Automotive 3 % €36.8 million (€42.1 million) Stationary Equipment 10 % €1,297.3 million Materi
Slide 26: Operating profit & net income
Operating profit & net income Q1-Q3 2017(1) Q1-Q3 2018 € million 119.3 59.0 89.4 62.7 60.3 14.4 45.9 1.7 8.6 35.6 26.7 0.1 26.8 2.0 4.6 20.2 EBITDA D&A EBIT Excep- EBIT Net Income Net Adj. D&A Adj. DDE EBIT Net Income Net before before tional after interest taxes income EBITDA(2) EBIT(2) effects bef
Slide 27: EBIT (before exceptional items)
EBIT (before exceptional items) € million 60.3 Operating profit increase driven by DEUTZ 45.9 26.3 Compact Engines 26.3 26.7 Adjusted EBIT margin improved by 2.2%-points 21.9 42.6 28.2 5.6 Reported EBIT in the DEUTZ Compact Engines -0.8 -8.6 -8.6 segment was affected by JV DDE Q1-Q3 2017 Q1-Q3
Slide 28: DEUTZ Compact Engines
DEUTZ Compact Engines (1) Q1-Q3 Q1-Q3 Change Q3 Q3 Change € million 2018 2017 in % € million 2018 2017 in % New orders 1,312.2 969.3 35.4 New orders 381.8 307.7 24.1 Unit sales (units) 141,034 111,947 26.0 Unit sales (units) 46,571 36,465 27.7 Revenue 1,085.2 907.6 19.6 Revenue 347.5 294.0 18.2 Adju
Slide 29: DEUTZ Customised Solutions
DEUTZ Customised Solutions Q1-Q3 Q1-Q3 Change Q3 Q3 Change € million 2018 2017 in % € million 2018 2017 in % New orders 214.8 204.5 5.0 New orders 63.7 63.1 1.0 Unit sales (units) 6,493 6,332 2.5 Unit sales (units) 2,100 2,215 -5.2 Revenue 191.3 185.6 3.1 Revenue 65.8 64.7 1.7 EBIT (before except. i
Slide 30: R&D spending & capital expenditure
R&D spending & capital expenditure R&D expenditure Capital expenditure (excl. R&D) € million 60.5 1.4 47.7 Gross expenditure 1.4 43.7 41.0 2.2 0.7 Reimbursements 59.1 Net expenditure 46.3 41.5 40.3 Net R&D Q1-Q3 2017 Q1-Q3 2018 Q1-Q3 2017 Q1-Q3 2018 expenditure ratio(1) 4.2% 4.6% Increase of R&D d
Slide 31: Working capital & operating cash flow
Working capital & operating cash flow Working capital Operating cash flow € million 296.3 190.7 96.4 55.5 30 Sep 2017 30 Sep 2018 Q1-Q3 2017 Q1-Q3 2018 Working capital ratio 13.5% 17.6% Working capital increase mainly due to higher business volume and higher inventory level Higher working capita
Slide 32: Free cash flow & net financial position
Free cash flow & net financial position Free cash flow(1) Net financial position € million 95.0 82.5 78.8 7.3 2017 Q3 2018 (LTM) 30 Sep 2017 30 Sep 2018 Decline of free cash flow due to working capital increase Positive net financial position (1) Free cash flow: cash flow from operating and inve
Slide 33: Equity ratio & funding
Equity ratio & funding € million 1,198.2 1,215.3 48.8% 49.5% 584.3 601.4 160 20 19 4 1 (1) 31 Dec 2017 30 Sep 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 Equity ratio increased to 49.5% Medium- to
Slide 34: Agenda
Agenda DEUTZ at a glance Strategy & market position Financials Outlook 34
Slide 35: Financial outlook
Financial outlook FY 2017 FY 2018 guidance(2) € million Revenue 1,479.1 > 1,600 EBIT margin (before exceptional items) 2.7 %(3) ≥ 4.5 % R&D expenditure(1) 67.0 70 - 80 Capex (excl. R&D)(1) 54.7 60 - 70 (1) Net of reimbursements (2) Assuming no further supply shortage (3) Restated Guidance figures
Slide 36: Financial calendar & contact details
Financial calendar & contact details FY 2018 results 14 March 2019 Annual general meeting 30 April 2019 Q1 2019 results 7 May 2019 ► Contact details Leslie Isabelle Iltgen Tel:+49 (0) 221 822 3600 SVP Communications & Investor Relations Fax:+49 (0) 221 822 15 3600 Ottostrasse 1 Email: le
Slide 37: Disclaimer
Disclaimer This presentation contains forward-looking statements that are subject to various risks and uncertainties. Future results could differ materially from those described in these forward-looking statements due to certain factors, e.g. changes in business, economic and competitive conditions,