Deutz Ag · XETR:DEZ
Deutz — Investor Day (October 2024)
119 slides from Deutz's investor day presentation, Oct 8, 2024
Slide 1: Capital Markets Day 2024
Capital Markets Day 2024 October 8, 2024 DEUTZ | Capital Markets Day 2024
Slide 2: Welcome
Welcome DEUTZ | Capital Markets Day 2024
Slide 3: Today’s agenda
Today’s agenda from 09:30 Registration & welcome coffee 09:55 Official welcome Mark Schneider 10:00 Current performance Sebastian Schulte | CEO, Oliver Neu I CFO Strategy update Sebastian Schulte 10:45 Deep-dive Classic Sebastian Schulte, Markus Müller | CSO/CTO, Petra Mayer | COO 11:25 COFFEE BREAK
Slide 4: Board of DEUTZ AG
Board of DEUTZ AG Dr. Sebastian C. Schulte Dr.-Ing. Petra Mayer Dr.-Ing. Markus Müller Oliver Neu Chief Executive Officer Chief Operating Officer Chief Technology and Chief Financial Officer (CEO) (COO) Sales Officer (CFO) (CTO/CSO) and Chief Human Resources Officer Since Oct 1, 2024 4 DEUTZ | Capit
Slide 5: Current performance
Current performance DEUTZ | Capital Markets Day 2024
Slide 6: Given the current market environment we have adjusted our guidance
Given the current market environment we have adjusted our guidance Guidance 2024 September 26, 2024 Less than 150,000 engines Unit sales (previously: max. of 160,000 engines) Around €1.8 billion September 27, 2024 Revenue (previously: €1.9 to €2.1 billion) Adjusted EBIT 4.0 bis 5.0% margin1 (previou
Slide 7: Our Americas and service businesses stabilize performance in 2024
Our Americas and service businesses stabilize performance in 2024 DEUTZ sales1 by region (in € million) DEUTZ service sales (in € million) CAGR 2,063 22-24F +7% 1,892 ~515 ~1,800 484 450 61% 62% 61% EMEA -3.3% 64% 64% EMEA 65% Americas Americas 24% 9.3% APAC 22% 28% APAC 28% 28% 5% -22.2% 27% China
Slide 8: Our margin performance remains resilient and more robust than in the past
Our margin performance remains resilient and more robust than in the past Revenue & Sales volume (in € million/ in k units) 2.063 DUAL+ 1.779 1.841 1.892 ~1.800 1.530 1.479 1.617 Revenue 1.453 1.247 1.260 1.296 876 Sold Classic Units 184 195 138 133 162 205 191 121 161 181 187 74 <150 EBIT Adj. & Ma
Slide 9: Top measures along our DUAL+ Strategy which drive our resilience
Top measures along our DUAL+ Strategy which drive our resilience Classic Service Green & Energy 1 Pricing Excellence: 1 Pricing Excellence: 1 Sale of Torqeedo group: ~€150 million acc. price increases in ~€50 million acc. price increases in ▪ Revenue impact: -€50 million 2022 & 2023 2022 & 2023 ▪ EB
Slide 10: We have initiated short-term and structural cost measures
We have initiated short-term and structural cost measures Impact 2024: Impact 2025 & 2026: Counter-acting market slowdown Structural cost reduction Objective Since Q1/2024 Additional levers ▪ Reduce costs and increase flexibility for ▪ Flexibilize Classic ▪ Reduce costs and cash- 2025 and beyond pro
Slide 11: Structural measures to reduce cost base by ~€50 million annually
Focusing on, but not limited to, Classic business, we have initiated structural measures to reduce cost base by ~€50 million annually Key levers Impact in € million I Flexibilize Classic R&D, accounting for delayed emission ~20 regulation cycles and adding flexibility by using near-shoring (after ra
Slide 12: Strategy update
Strategy update DEUTZ | Capital Markets Day 2024
Slide 13: Our mission: We ensure the world keeps moving.
Our mission: We ensure the world keeps moving. 13 DEUTZ | Capital Markets Day 2024
Slide 14: We have clear strategic criteria which define our path forward
We have clear strategic criteria which define our path forward Profitable Finding the areas in which we can grow successfully and profitably - always with a "right-to-win"! growth Relevant Further develop our portfolio based on our capabilities so that we continue to have competitive offerings (prod
Slide 15: We are in an environment which is dynamic and offers opportunities for profitable growth
We are in an environment which is dynamic and offers opportunities for profitable growth Urbanization & Climate protection & Digitalization & population growth new energy mix rising consumption Growth opportunities Innovation and shifting Growth in materials handling primarily in efficient markets (
Slide 16: Our long-term strategic approach reflects the dynamics of our environment
Our long-term strategic approach reflects the dynamics of our environment STRENGTHEN THE BASE BROADEN THE BASE BECOME SUSTAINABLE Horizon III 2030++ Horizon II 2026 – 2030 Horizon I 2022 – 2025 Improve performance, prepare & Continue to build the solutions Unleash the full potential and set right fo
Slide 17: We are on the right track
We are on the right track Classic: First steps in market consolidation and entering new market segments + consistent performance improvement to achieve EBIT margin >6%1 Service: Strong progress in building up the business organically and with acquisitions to €600 million revenue in 2025 Green: Align
Slide 18: Looking ahead to the second horizon we need to continue to grow – size matters
Looking ahead to the second horizon we need to continue to grow – size matters DEUTZ revenue development (in € billion) ~4.0 11% CAGR Profitable growth 7% CAGR ~2.4 ▪ Continue to implement existing 2.0 strategies in Classic, Service and Relevant Green portfolio ▪ Push additional business Cyclical mo
Slide 19: Based on our structured “Strategic Dialogue” process, we know how to achieve the next level of growth
Based on our structured “Strategic Dialogue” process, we know how to achieve the next level of growth Our environment Our capabilities Strategic Dialogue ▪ Technological developments and ▪ (Engineering) expertise and disruptions The Strategic Dialogue application know-how ▪ Economic and market growt
Slide 20: Market growth prospects for our segments: A mixed picture
Market growth prospects for our segments: A mixed picture Power range Segment (kW)1 2025 2030 2035 2040 Construction Low Mid High Material Low Handling Mid High Agriculture Low Mid High Pumps & Low Compressors Mid High Ground Support Low Equipment Mid High By 2035, approx. 75% market share of diesel
Slide 21: Our “Strategic Dialogue” is based on market and customer needs
Our “Strategic Dialogue” is based on market and customer needs to strengthen our “right-to-win” in existing and new areas Strengthened existing Strategic intelligence Annual strategy process business The Strategic Dialogue is our central Strategy Process which connects the regional market intelligen
Slide 22: How our “strategic speedboats” work
How our “strategic speedboats” work ▪ Small teams (strategy team, from organization and external) – no need for long (internal) alignments ▪ Results expected within short time – pragmatic approach ▪ Tailor-made integration into DEUTZ structures after successful proof of concept − Criteria: Profitabl
Slide 23: Our first successful speedboat: Entry into “Energy”
Our first successful speedboat: Entry into “Energy” Strategy Strategic dialogue speedboat Target search We are building a new BU Deutz Energy over the coming months2024 ➢ All Regions state significant potential and interest for Business Unit Deutz Energy Roadmap II ▪ Developing the business III ▪ Dr
Slide 24: We need to broaden our strategic approach
We need to broaden our strategic approach Lessons learned ▪ Sufficient market potential for us to continue to profitably grow our Classic und Service business Strategic Dialogue ▪ Market demand lagging for our Green business where we have a “right-to-win” Alignment (larger off-highway solutions) – n
Slide 25: As we enter the second horizon, we will realign the DUAL+ strategy
As we enter the second horizon, we will realign the DUAL+ strategy STRENGTHEN THE BASE BROADEN THE BASE Horizon II 2025 – 2030 Horizon I 2022 – 2024 I II + R 25 DEUTZ | Capital Markets Day 2024
Slide 26: Our DUAL+ strategy realigned for our second strategic horizon
Our DUAL+ strategy realigned for our second strategic horizon Grow Classic business Expand Solutions offering in based on strong Energy & New Technology performance and (formerly “Green") and beyond, consolidation SOLUTIONS where we have a right-to-win → margin uptake → Expansion of value chain cove
Slide 27: DUAL+ continued: What this means going forward
DUAL+ continued: What this means going forward Classic Service Solutions ▪ Continue consolidation also in ▪ Grow business to revenues of ▪ Capture value beyond engine and other application segments and €1 billion by 2030 service by entering businesses with power ranges, which will be ▪ Close geograp
Slide 28: Strong 2030 revenue ambition
Strong 2030 revenue ambition DEUTZ mid-term revenue ambition (in € billion) +11% CAGR ~4.0 ▪ Solutions expected to grow with 30% GR until 2030; more than €500 3.2-3.4 21% Solutions million revenue expected from Energy – 18% growth driven both organically and via ~2.4 25% Service acquisitions and >€3
Slide 29: We also updated our mid-term targets to 2028
We also updated our mid-term targets to 2028 Mid-term Outlook 2028 targets 2030 Sales €3.2-3.4 billion Adjusted EBIT 8 to 9% margin R Upward trajectory: Dividend Stable or higher than previous year 29 DEUTZ | Capital Markets Day 2024
Slide 30: Beyond 2030, in Horizon III, we expect growth to shift to Solutions
Beyond 2030, in Horizon III, we expect growth to shift to Solutions and the share of Classic to decrease even more STRENGTHEN THE BASE BROADEN THE BASE BECOME SUSTAINABLE Horizon II Horizon III 2026 – 2030 2030++ Horizon I Drop-off in volumes, esp. after 2022 – 2025 2035 as Diesel engines are Classi
Slide 31: Deep-dive Classic
Deep-dive Classic DEUTZ | Capital Markets Day 2024
Slide 32: Our DUAL+ strategy: Focus Classic
Our DUAL+ strategy: Focus Classic ▪ Continue consolidation also in other application segments and power ranges, which will be dependent on combustion engines longer ▪ Align engine portfolio to become more cost-effective and to access high growth pockets (e.g. Defense) ▪ Drive performance e.g. via ne
Slide 33: Basis for our Classic strategy is our strong market and technology intelligence
Basis for our Classic strategy is our strong market and technology intelligence ▪ Comprehensive, application- driven model ▪ Updated regularly ▪ Based on renowned market studies and expert interviews with customers and technology experts 33 1 Low: 19-56 kW; Medium: 56-250 kW; High: 250-560 kW. Negat
Slide 34: We expect Diesel engine volumes to drop significantly after 2035
We expect Diesel engine volumes to drop significantly after 2035 Development of relevant1 engine market (in units k of engines, indicative) ~6,300 ~6,500 ~5,800 ~6,000 ▪ Indicative view only, as based on ~5,000 current DEUTZ portfolio and ~4,800 available information/market insight ▪ Continued high
Slide 35: Three strategic directions to develop our portfolio
Three strategic directions to develop our portfolio 19-36 kW 36-56 kW 56-130 kW 130-250 kW 250-560 kW + 1 Consolidation in Construction 1 existing applications Material Handling Extension into 2 higher power Agriculture 2 ranges Stationary Push into new 3 applications with Other 3 comparable power r
Slide 36: Structured process for additional strategic partnerships
We have a structured, continuous process to ensure that we realize additional strategic partnerships Consolidation funnel Selection of relevant markets, regions & applications ▪ Focus on ICE in Americas, Europe and Asia off- and potentially on-highway 1 ▪ Continuous update based on strategic intelli
Slide 37: Execution of our strategic partnership with RRPS is a strong proof point
Execution of our strategic partnership with RRPS is a strong proof point 90% of customers transferred giving access to new applications with higher power ranges – strong partnerships developing 9 months from signing to execution – new set-up operational on Day 1 after closing (e.g. personnel, IT, lo
Slide 38: Integration of Daimler Truck engines
We will continue on this trajectory with integration of Daimler Truck engines First phase MDEG/HDEP engines Second phase MDEG/HDEP engines (2024-2028) (2028 ff) ▪ Building up customer relationships ▪ Rolling out technologically more and exploring opportunities for advanced Daimler Truck engine cross
Slide 39: What our customers think
What our customers think 39 DEUTZ | Capital Markets Day 2024
Slide 40: Mid 2025 we will be launching our new 3.9L engine
Mid 2025 we will be launching our new 3.9L engine – jointly developed with John Deere ▪ Developed in cooperation with John Deere ▪ Production to start in 2025 – successor of highly successful 3.6L and 4.1L engine ▪ State of the art technical concept, e.g. one engine platform from 75kW up to 130kW, b
Slide 41: Long-term cooperation with TAFE Motors
Long-term cooperation with TAFE Motors ▪ Long-term cooperation with TAFE Motors for licensed production of DEUTZ engines starting 2027 ▪ Objective: Production of up to 30,000 DEUTZ-engines per year until 2030 in 2.2 liter (50-75 hp) and 2.9 liter (75-100 hp) class ▪ Target markets: Locally given inc
Slide 42: Emission standards in key applications expected to tighten only from 2032 onwards
Emission standards in key applications expected to tighten only from 2032 onwards Perspective on expected development of emission standards (indicative) ▪ Typical timeline from publication to implementation of regulation (following new “ n-Road”-emission regulation publication): at least 5+ years fo
Slide 43: Structural adjustment of Classic R&D given changing environment
Structural adjustment of Classic R&D given changing environment Driver Key lever in optimizing Classic R&D Expected impact Change to ▪ Capacity alignment to lesser projects/slower dynamics in pipeline ▪ Reduced cost base (potential of emission more than 25% reduction) ▪ Optimized allocation of resou
Slide 44: Significant operations benefits
MM > PM Significant operations benefits ▪ Production in F Motors’ modern manufacturing facility at Alwar in India ▪ Build-up of dedicated line for DEUTZ engines – with production start in 2026 ▪ Opportunity to expand current supplier base and increase a more efficiency and resilience in German produ
Slide 45: Long-term focus: Dual- and best-cost country sourcing
Long-term focus: Dual- and best-cost country sourcing Introduction of Best Cost Country (BCC) sourcing in India (e.g., via cooperation with TAFE Motors) Extension of dual sourcing for engine components to increase resilience with focus on BCC (e.g., casted and forged parts) Utilization of insourcing
Slide 46: In 2024 focus on achieving procurement savings of about €40 million
In 2024 focus on achieving procurement savings of about €40 million Procurement spend savings (in € million) ▪ In direct materials driven by intense 39 negotiations with major suppliers and ramp-up of production of Best Cost Country Dual Sources with Chinese ~62% achieved suppliers Indirect spend 26
Slide 47: Clear cost focus in Operations to counteract cyclical Classic business
Clear cost focus in Operations to counteract cyclical Classic business and scale-back capacities Capacities Inventories Capex ▪ Reduction of shifts, e.g. Porz ▪ Target-driven inventory ▪ Postponement of projects & <4l and >4l, Ulm, Herschbach management to align to longer maintenance cycles ▪ Short-
Slide 48: Increasing automation to increase efficiency
Increasing automation to increase efficiency F Automation in mechanical manufacturing, especially in Impact (on average) high-cost countries with invest Automation of ~€8 million in 2024 Productivity 24% increase Increase 10-20% in output 48 DEUTZ | Capital Markets Day 2024
Slide 49: Optimization of the production footprint
Optimization of the production footprint to ensure long-term competitiveness Optimization imperatives Production sites DEUTZ (Focus Classic, output numbers 2023) Future-readiness of sites given Herschbach Tjanjin, China Serial production, 2.9L& 6.1L strategy & expected demand Cologne Kalk Mechanical
Slide 50: How Classic contributes to our 2030 ambition
How Classic contributes to our 2030 ambition DEUTZ mid-term revenue ambition - Classic (in € billion, indicative) ~2.2 ~0.3 ~0.4 ~1.2 ~0.3 Classic 2024 RRPS/DT1 Volume & mix Pricing Classic 2030 ▪ Integration of ▪ Strategic shifts in the ▪ Moderate MDEP/HDEG portfolio annual engines and ▪ Recovery o
Slide 51: Additional upside expected in growing defense market
Additional upside expected in growing defense market Global market for engines Market trends in armoured fighting vehicles1 (in € billion) Defense- specific Increasing defense budgets +4% CAGR Increased demand for ground transportation 2.3 Increasing competiveness for integrators 1.8 Heavier vehicle
Slide 52: Organic and inorganic pathways into Defense
Organic and inorganic pathways into Defense Key opportunities in supplying engines and/or components into Defense market (focus on armoured fighting vehicles and Europe) as well as structured approach in gaining ISS-business1 in defense Organic: ▪ Explore opportunities in engine and/or (existing) co
Slide 53: COFFEE BREAK
COFFEE BREAK Start at 11:45 DEUTZ | Capital Markets Day 2024
Slide 54: Deep-dive Service
Deep-dive Service DEUTZ | Capital Markets Day 2024
Slide 55: Our service business in a nutshell
Our service business in a nutshell DEUTZ service sales 2023: €484 million Billable service 8% XChange 23% 69% Spare parts Global presence 1,025 >130 DEUTZ service dealers globally countries DEUTZ | Capital Markets Day 2024
Slide 56: Significant growth potential for the DEUTZ service business
Significant growth potential for the DEUTZ service business Spare parts (in € billion) Opportunity Opportunity 16.0 14.9 for DEUTZ for DEUTZ 1.1 0.7 0.4 ▪ Every 1pp higher 36% | 3% penetration gain of DEUTZ market is €18 million growth Billable service / maintenance hours (in € billion) ▪ Every 1pp
Slide 57: Our DUAL+ strategy: Focus Service
Our DUAL+ strategy: Focus Service ▪ Grow business to revenues of €1 billion by 2030 ▪ Continue to invest in network development and establish new sales channels ▪ Expand into new business models (e.g. 3rd party, industrial fleet) ▪ Invest in digital business models (e.g. FusionHUB) ▪ Close geographi
Slide 58: We will continue to build our service network – with focus on the US
We will continue to build our service network – with focus on the US The idea Approach USA – identified levers to accelerate growth 1▪ Prepare the base Optimization of existing DEUTZ Power Centers using commercial and operational levers to increase the total revenue and revenue/ tech – e.g. by freei
Slide 59: We will tap additional potential by establishing industrial fleet services
We will tap additional potential by establishing industrial fleet services The idea Exemplary proof points US ▪ Highly profitable service business of 3rd Development and scaling of party genset engines services for fleet customers ▪ Extension of Aerial Work Platform ▪ Leveraging our engine know-how
Slide 60: Digitalization will further push our service business
Digitalization will further push our service business with potential for next-level services Digitalization@DEUTZ Service Value-added services Scale-up Base ▪ Monetization of additional ▪ Continued scale-up of services: ▪ Connecting assets: connected assets (10,000 − Management of spare Currently si
Slide 61: We will continue to leverage Service M&A
We will continue to leverage Service M&A to grow and broaden our geographic reach The idea Exemplary proof points 2023 ▪ Successful integration of e.g. Diesel acquisitions Motor Nordics, Hochschild Continue to grow service business with M&A Poland ▪ Recent acquisition of BTH Fast ▪ Addressing geogra
Slide 62: How Service contributes to our 2030 ambition
How Service contributes to our 2030 ambition DEUTZ mid-term revenue ambition – Service (in € million, indicative) ~1,000 ~85 ~200 ~50 ~50 ~515 ~100 Service 2024 Network Industrial Digital M&A Pricing & Service 2030 development fleet business growth models ▪ Expansion of ▪ Full service ▪ Scaling and
Slide 63: Deep-dive Solutions
Deep-dive Solutions DEUTZ | Capital Markets Day 2024
Slide 64: Our DUAL+ strategy: Focus Solutions
Our DUAL+ strategy: Focus Solutions ▪ Capture value beyond engine and service by entering businesses with right-to-win for DEUTZ, higher value chain coverage and long-term sustainability ▪ Focus on tailored New Technology offering (formerly “Green”) based on customer and market demands ▪ Expand Ener
Slide 65: We have currently two offerings in New Technology
We have currently two offerings in New Technology e-Products H2 engines E-DEUTZ DEUTZ TCG 7.8 reference H2 Status ▪ Comprehensive offering based on ▪ H2 engine using 80% of basis battery packaging, battery management technology of classic engine systems and 360V-power systems ▪ Initial projects comp
Slide 66: For e-Products we have a unique value proposition
For e-Products we have a unique value proposition Battery Management Application Global service Brand equity System (BMS) and integration network software expertise ▪ Proprietary ▪ Internal capabilities ▪ Global repair and ▪ High recognition of electronics and for integrating battery maintenance net
Slide 67: Strong position in the value chain and strategic control points
We have strong position in the value chain and are investigating a push into additional strategic control points Costs & performance Performance and costs Ability to enable service to determining of converter creating take care of high voltage competitiveness – integration benefits for components to
Slide 68: We have a good pipeline of fixed customer projects and offers
We have a good pipeline of fixed customer projects and offers in the market … Customer Application Road sweeper Cooling trailer Cement pump Strong interest from both off- as on-road OEMs for DEUTZ e-Products 68 DEUTZ | Capital Markets Day 2024
Slide 69: Structural market demand will only become relevant after 2026
… however: Structural market demand will only become relevant after 2026 for us Market perspective What this means for us Customers with high volume production 2024-25 2025 2026ff Focus on in-house solutions – but expected to change in case of more complex solutions in mid to long-term Solid foundat
Slide 70: With our TCG 7.8 H2 we offer a commercially viable engine
With our TCG 7.8 H2 we offer a commercially viable engine based on our proven engine technology CO2-FREE TECHNLOLOGY ECONOMICAL ALTERNATIVE Attractive overall cost perspective, upgrade of Meets current emission limits for zero emission existing fleets and quick industrialization possible heavy-duty
Slide 71: Our H2 engine is certified for a next generation of regional trains
Our H2 engine is certified for a next generation of regional trains ▪ R Zero as successor of “Regio huttle” with first stage V certified H2 combustion engine TCG 7.8 H2 for railcars ▪ First train displayed at Innotrans 2024 − 2 engines TCG 7.8 H2 (65° inclination with 200kw@2200rpm) − H2 tanks on th
Slide 72: Our H2 project in Beijing was commissioned in September
Our H2 project in Beijing was commissioned in September ▪ First firing of gensets with initial four H2 engines on September 11, 2024 in Beijing ▪ High political support with mayors of both Cologne (Henriette Reker) and Beijing (Jin Wie) present ▪ Potential to save 800 tons of CO2 p.a. using grey hyd
Slide 73: Based on slower market uptake, we have adjusted investments
Based on the slower market uptake in e-Products and H2, we have adjusted investments Market perspective R&D budget New Tech ▪ Heterogenous and (in € million) e-Products fragmented customer landscape leading to slower uptake than expected ~-30% ▪ Dynamic uptake expected Need for a smart, Reduction ~3
Slide 74: Update on Energy – our genset business
Update on Energy – our genset business 74 DEUTZ | Capital Markets Day 2024
Slide 75: Doubling of global electricity demand leads to growth in decentralized supply
Doubling of global electricity demand & changes in the energy mix leads to growth in decentralized energy supply Global energy supply (in EJ) ▪ Doubling of global electricity demand by 2050 +122% CAGR and increasing share of renewable energy, but 33.974 no expansion of grids at the same pace ▪ Growt
Slide 76: Growth drivers for decentralized electricity supply in North America
Growth drivers for decentralized electricity supply in North America Extreme Insufficient Renewable Relocation of (Public) weather events Infrastructure energies production investments More frequent Outdated power grids Increasing demand for Relocation of Increasing investments occurrence of and inc
Slide 77: Case example microgrid – how US customers ensure electricity self-sufficiency
Case example microgrid – how US customers ensure electricity self- sufficiency Microgrid Residential Commercial Genset Controller Users Wind Industrial Public services Solar Energy Storage 77 DEUTZ | Capital Markets Day 2024
Slide 78: North America is a particularly attractive market for decentralized power supply
North America is a particularly attractive and relevant market for decentralized power supply Market for gensets in North America (in $ billion) +7 % p.a. 14.4 ▪ North American market accounts 5% Rental for almost half of the global 7% equipment genset market, which will grow to +7 % p.a. Micro $34.
Slide 79: Blue Star Power Systems is one of the top genset producers in North America
Blue Star Power Systems is one of the top 10 genset producers in the North American market ▪ Acquisition of Blue Star Power Systems closed in Revenue distribution 2023 August 2024 ▪ Production and sales of diesel and gas-powered Region gensets from 20 to 2,000 kW Canada: 15 % ▪ 120 employees ▪ Expec
Slide 80: How Blue Star Power Systems works
How Blue Star Power Systems works 80 DEUTZ | Capital Markets Day 2024
Slide 81: Blue Star Power Systems has achieved a strong development in recent years
Blue Star Power Systems has achieved a strong development in recent years and has clear growth prospects Revenue development Blue Star Power Systems (in $ million) ▪ Growth with 15% p.a. in recent years above growth rate of the North American market >150 ▪ Revenue almost doubled since 2019, EBITDA m
Slide 82: How we will lead Blue Star Power Systems
How we will lead Blue Star Power Systems ▪ Part of future BU Energy responsible for developing the Energy business overall ▪ Managed on a stand-alone basis to maintain entrepreneurial spirit ▪ Selective integration focusing on − Identifying commercial synergies (e.g., in Service) − Ensuring sufficie
Slide 83: Blue Star Power Systems opens up growth opportunities for the Energy business
Blue Star Power Systems opens up growth opportunities for the Energy business Grow Energy Further scaling of Blue Star Power Systems business in US and beyond – business in incl. scale-up of service business Americas leveraging existing US basis Expansion of the genset business globally, e.g., in As
Slide 84: Region-specific strategies to grow the Energy business
We will deploy region-specific strategies to grow the Energy business both organically and inorganically ▪ Expand MagiDEUTZ into Africa & into Europe (organic) ▪ Target strategic partnerships in Europe (inorganic) ▪ Leverage delivery of H2 ▪ Grow BSPS projects to Beijing to business in North create
Slide 85: We will grow the Energy business to >€500 million by 2030
We will grow the Energy business to >€500 million by 2030 Ambition for DEUTZ Energy (in € million, indicative) >500 ~220 ~200 ~30 ~40 Energy 2024 MagiDEUTZ growth Blue Star Organic & Energy 2030 (MagiDEUTZ) Power Systems inorganic growth (incl. growth) Developing a relevant, profitable energy busine
Slide 86: How Solutions contributes to our 2030 ambition
How Solutions contributes to our 2030 ambition DEUTZ mid-term revenue ambition - Solutions (in € billion, indicative) ~0.9 ~0.5 ~0.3 <0.1 Solutions 2024 New Technology Energy Strategy Solutions 2030 "speedboats" ▪ Build-up of electric drive ▪ Organic and inorganic ▪ Upside potential based system bus
Slide 87: Q&A session
Q&A session DEUTZ | Capital Markets Day 2024
Slide 88: LUNCH
LUNCH Start at 13:30 DEUTZ | Capital Markets Day 2024
Slide 89: CFO perspective
CFO perspective DEUTZ | Capital Markets Day 2024
Slide 90: Full focus on implementation of DUAL+ strategy
Full focus on implementation of DUAL+ strategy Our strategy Our 2030 ambition CFO contribution Ensure execution & performance Finance our growth 90 DEUTZ | Capital Markets Day 2024
Slide 91: Growth in resilient Service and Solutions – Classic expected to recover
Growth in resilient Service and Solutions – Classic expected to recover DEUTZ mid-term revenue target (in € million, indicative) Organic Inorganic ~4,000 3,200-3,400 ~300 ~200 ~200 54% Classic ~100 58% ~1,800 ~700 n total about ~€300 million or ~20% 25% Service ~1,200 of growth driven 25% inorganica
Slide 92: CFO focus on ensuring execution of our strategy
CFO focus on ensuring execution of our strategy Classic Service Solutions ▪ Driving structural cost ▪ Safeguarding our margins as we ▪ Monitoring smart scale-up reduction, e.g. production grow the business approach in New Tech (e.g. footprint, R&D, SG&A ▪ Ensuring monetization of new right level of
Slide 93: CFO focus on ensuring performance
CFO focus on ensuring performance Cost program (in € million) ~50 ▪ Progress to be tracked by 20 I Classic R&D PMO using established ~30 maturity grade logic (e.g. identified, confirmed, 10 II New Tech R&D implemented) ~20 5 III Regional set-ups ▪ Driving a sustainable 5 IV Supply chain performance
Slide 94: Finance our growth: Enabling different types of M&A transactions
Finance our growth: Enabling different types of M&A transactions Classic Service Solutions ▪ Providing sufficient financing ▪ Enabling efficient network ▪ Ensuring financing of larger for potential larger scale growth scale M&A in Energy & New M&A opportunities, e.g. ▪ Supporting our serial M&A Tech
Slide 95: Internal financing: Continuous improvement in cash drivers
Internal financing: Continuous improvement in cash drivers EBITDA to cash walk (illustrative) Focus areas EBITDA Strengthening margins via growth, EBITDA resilience and performance Capex measures Delta NWC Structural reduction as business Interest & tax CAPEX less CAPEX intensive – target FCF 3.5-4%
Slide 96: External financing: Increased resilience allows for higher leverage
External financing: Increased resilience allows for higher leverage Equity ratio Leverage (Net debt/ EBITDA) H2-effects from capital increase and financing RRPS engines & Blue Star acquisition not reflected 46% 45% 47% 50% 0.83 0.70 0.74 0.65 2021 2022 2023 H1 2024 2021 2022 2023 H1 2024 Targeted to
Slide 97: Clear focus on shareholder value
Clear focus on shareholder value Room for enhanced Improved operating strategic performance positioning (incl. M&A) Opportunity to increase financial + leverage over time and/or H1 ~0.7 Net debt/EBITDA Future ~1.5 Net debt/EBITDA Higher resilience of Increased pay-out business model to shareholders
Slide 98: Revised DUAL+ strategy triggers new structure of segment reporting
Revised DUAL+ strategy triggers new structure of segment reporting Our strategy Segment structure from 2025 forward I + DEUTZ Classic → Current DEUTZ Classic Engines Business DEUTZ DEUTZ Service Engines & Services → Service Business w/o Service Business from DEUTZ Solutions II Energy DEUTZ → DEUTZ g
Slide 99: Both segments will contribute to our overall margin improvement
Both segments will contribute to our overall margin improvement DEUTZ 2028 mid-term targets EBIT adj. (in € million, indic.) ▪ Engines & Services: ~260-310 − Recovery impact as well as ~70 performance uptake due to cost reduction especially in Engines − Organic & inorganic service growth ~140 at sta
Slide 100: Our new mid-term targets
Our new mid-term targets Mid-term targets 2028 Revenue split 2028 From 2025 on, Unit sales no longer part of guidance ~ 0.7-0.8 Sales €3.2-3.4 billion ~ 0.5-0.6 Thereof: >0.4 Energy Adjusted 8 to 9% ~ 1.8-2.0 EBIT margin R Upward trajectory: Dividend Stable or higher than previous year Classic Solut
Slide 101: Key message from a CFO perspective
Key message from a CFO perspective Clear top-line growth path defined with healthy mix of organic and focused inorganic growth Business model towards businesses with higher resilience > prospect of uplifting valuation multiples Bottom-line improvement with performance focus and cost reduction progra
Slide 102: Transformation update
Transformation update DEUTZ | Capital Markets Day 2024
Slide 103: DUAL+ is a major transformation for DEUTZ
DUAL+ is a major transformation for DEUTZ Change is imperative ▪ Pressure on in 2030 established business before 2022 model ▪ €4 billion company – doubling in size ▪ Technology shift with EBIT margins of 10% ▪ Flat business, no significant growth ▪ Need for relevant size ▪ More diversified and resil
Slide 104: Basis is a strong performance culture
Basis is a strong performance culture ▪ Courage to break new grounds without giving up our strengths Promoting ▪ Ownership in leading the company – with clear business performance responsibilities, lean structures and easy decision-taking culture ▪ Execution mindset to achieve performance upside and
Slide 105: How we promote a performance culture
How we promote a performance culture Ownership Execution Engagement Implemented ▪ Regional Strategic Dialogues ▪ Pricing and procurement ▪ >60% of leadership to measure each Regional programs positions1 exchanged since CEO against their growth path 2022, thereof >40% with ▪ Strategy speedboats to ra
Slide 106: A pessimist sees the difficulty in every opportunity
A pessimist sees the difficulty in every opportunity, an optimist sees the opportunity in every difficulty. 106 DEUTZ | Capital Markets Day 2024
Slide 107: Wrap-up
Wrap-up DEUTZ | Capital Markets Day 2024
Slide 108: Looking to our next strategic horizon with confidence
Looking to our next strategic horizon with confidence STRENGTHEN THE BASE BROADEN THE BASE Horizon II 2025 – 2030 Horizon I 2022 – 2024 I II + R 108 DEUTZ | Capital Markets Day 2024
Slide 109: Benefits of our aligned DUAL+ strategy
Benefits of our aligned DUAL+ strategy Profitable growth Relevant portfolio R Resilient set-up Future viability and value enhancement of DEUTZ 109 DEUTZ | Capital Markets Day 2024
Slide 110: Strong 2030 revenue ambition
Strong 2030 revenue ambition DEUTZ mid-term revenue ambition (in € billion) +11% CAGR ~4.0 ▪ Solutions expected to grow with 30% GR until 2030; more than €500 3.2-3.4 21% Solutions million revenue expected from Energy – 18% growth driven both organically and via ~2.4 25% Service acquisitions and >€3
Slide 111: We have initiated short-term and structural cost measures
We have initiated short-term and structural cost measures Impact 2024: Impact 2025 & 2026: Counter-acting market slowdown Structural cost reduction Objective Since Q1/2024 Additional levers ▪ Reduce costs and increase flexibility for ▪ Flexibilize Classic ▪ Reduce costs and cash- 2025 and beyond pro
Slide 112: Our 2028 mid-term targets
Our 2028 mid-term targets Mid-term Outlook 2028 targets 2030 Sales €3.2-3.4 billion Adjusted EBIT 8 to 9% margin R Upward trajectory: Dividend Stable or higher per share than previous year 112 DEUTZ | Capital Markets Day 2024
Slide 113: Our mission: We ensure the world keeps moving.
Our mission: We ensure the world keeps moving. 113 DEUTZ | Capital Markets Day 2024
Slide 114: Disclaimer
Dislaimer 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 115: Thank you
Thank you DEUTZ | Capital Markets Day 2024
Slide 116: Q&A session
Q&A session DEUTZ | Capital Markets Day 2024
Slide 117: Info sessions
Info sessions DEUTZ | Capital Markets Day 2024
Slide 118: Info sessions
Info sessions Get to know more Join the Shopfloor about our Energy tour (1h), please business with gather at 15:00 at Katharina Krüger the Innovation (Strategy) and Center entrance David Evans (Energy) at the Blue Star Power Systems genset Ask our experts for Have a look at the more about the HyCET
Slide 119: Thank you and farewell
Thank you and farewell DEUTZ | Capital Markets Day 2024