Slide 1: Analysts' Meeting Financial Year 2007
A N A L Y S T S´ M E E T I N G Financial year 2007 Frankfurt/Main, 28 March 2008
Slide 2: Agenda
Agenda Highlights of financial year 2007 Dr Helmut Leube, Chairman of the Management Board Key performance indicators for 2007 Helmut Meyer, CFO Outlook for 2008 Dr Helmut Leube, Chairman of the Management Board Appendix 2
Slide 3: Business highlights of 2007
Business highlights of 2007 Sustained high growth with full capacity utilisation ¦ New orders +22 %, revenue +29 % DEUTZ Power Systems sold for €360 million, gain on disposal (after taxes) of €118 million First full year of production of the new TCD 2013 4V commercial vehicle engine Series l
Slide 4: DEUTZ Dalian joint venture off to a good start
DEUTZ Dalian joint venture off to a good start Start of operations: 1 August 2007 Kann man Fotos China neues Capital expenditure of €58 million, around 2,000 Werk einfügen ? employees 42,000 engines produced in the first 5 months, 3,000 of which using DEUTZ technology Revenue reaches €80 mil
Slide 5: Unit sales of engines rise sharply in Mobile Machinery and Automotive segments
Unit sales of engines rise sharply in Mobile Machinery and Automotive segments Unit sales by application segment 2007 (2006) Other 2.152 (1.326) Mobile Machinery 141.670 (110.375) Automotive 33.593 (14.414) Agricultural Machinery 34.636 (36.114) Stationary Equipment 73.810 (74.450) 5
Slide 6: Strong growth in 2007: new orders and unit sales up more than 20%
Strong growth in 2007: DEUTZ increases new orders and unit sales by more than 20 % New orders (€ million) Unit sales +22.2 % +20.8 % 1,584.5 285,861 236,679 36,890 1,296.9 380.6 37,477 248,971 346.5 1,203.9 199,202 950.4 2006 2007 2006 2007 Compact Engines DEUTZ Customised Solutions 6
Slide 7: Group revenue benefits from higher demand for commercial-vehicle engines
Group revenue benefits in particular from higher demand for commercial-vehicle engines Revenue (€ million) EBIT (€ million) +28.8 % +43.4 % 1,524.2 95.5 338.2 1,183.6 66.6 44.7 315.3 1,186.0 30.5 868.3 45.3 37.8 5.5 2006 2007 -1.7 2006 2007 Compact Engines DEUTZ Customised Solutions Other 7
Slide 8: Revenue by region
Revenue by region 2007 (2006) Middle East 43.8 (37.6) Germany Asia-Pacific 335.4 (300.3) 123.8 (77.1) Americas 207.2 (210.2) 1,524.2 (1,183.6) (€ million) Africa 45.0 (44.5) Rest of Europe 769.0 (513.9) 8
Slide 9: Compact Engines segment: highlights
Compact Engines segment: highlights Revenue distribution by application segment Strong growth in commercial- 2007 (2006) vehicle engines Service Mobile Unit sales of 4-litre to 8-litre 8 % (9 %) Machinery engines: +38 % Other 44 % (44 %) 1 % (2 %) 1,186.0 (868.3) Automotive (€ million) 20 % (10
Slide 10: DEUTZ Customised Solutions segment: highlights
DEUTZ Customised Solutions segment: highlights Revenue distribution by application segment New orders increase 2007 (2006) by 10 % Mobile Service revenue rises 8.5 % to Machinery Service €111 million (€102 million) 19 % (18 %) 33 % (32 %) 338.2 (315.3) Stationary (€ million) Equipment 21 % (29 %
Slide 11: Agenda
Agenda Highlights of financial year 2007 Dr Helmut Leube, Chairman of the Management Board Key performance indicators for 2007 Helmut Meyer, CFO Outlook for 2008 Dr Helmut Leube, Chairman of the Management Board Appendix 11
Slide 12: Financial highlights of 2007
Financial highlights of 2007 EBIT reaches €95.5 million (+43%) EBIT margin: 6.3 % (+0.7 percentage points) Net income from continuing operations: €59.4 million (+54%) Net income after tax on discontinued operations: €123.9 million Î Outstanding financial year 2007 12
Slide 13: Financial topics in 2007
Financial topics in 2007 Long-term financing basis secured through private placement in the U.S. ¦ Bonds worth more than USD 274 million (€203 million) placed with U.S. institutional investors, tranches run for 5, 7 and 10 years ¦ Proceeds used for DEUTZ Dalian joint venture (€58 million) and for
Slide 14: Income statement (selected items): Upward earnings trend in 2007
Income statement (selected items): Upward earnings trend in 2007 (€ million) 2007 2006 Delta in % Revenue 1,524.2 1,183.6 28.8 Other operating income 66.7 52.1 28.0 Cost of materials -1,029.7 -758.9 35.7 Other operating expenses -155.3 -124.4 24.8 EBIT 95.5 66.6 43.4 Interest expense, net -18.1 -19.
Slide 15: Cash flow statement (condensed)
Cash flow statement (condensed): Cash flows impacted by special effects DEUTZ Group (€ million) 2007 2006 EBIT 95.5 66.6 Cash flow from operating activities before payment of compensation for vested company pension rights (continuing operations) 41.1 84.4 Payment of compensation for vested company p
Slide 16: Commitment in China and capacity expansion affect capital expenditure
Commitment in China and capacity expansion affect capital expenditure, R&D develops as planned Capital expenditure 1) (€ million) R&D (€ million) +75.2 % +1.8 % 143.5 7.3 57.8 China 81.9 JV 4.7 77.2 78.4 54.8 55.8 8.5 8.5 46.3 47.3 2006 2007 2006 2007 R&D ratio 2) 4.6 % 3.7 % 1) excluding capitalise
Slide 17: Net financial position positive, sound equity ratio of 40%
Net financial position1) positive, sound equity ratio of 40% Net financial position 1) (€ million) Equity ratio (%) 89.7 40.4 30.8 31 Dec. 31 Dec. 31 Dec. 31 Dec. 2006 2007 2006 2007 -34.0 1) cash and cash equivalents less current and non-current interest-bearing financial liabilities 17
Slide 18: Working capital ratio of 13%, ROCE increases further
Working capital ratio of 13 %, ROCE increases further Working capital1) (€ million) ROCE1) in % 203.2 13.5 10.7 154.3 average average 2007 2006 2006 2007 WC ratio Capital employed €622.7 €708.7 (average) 13.0 % 13.3 % (average) million million 1) 2006: comparable calculation for continuing operation
Slide 19: Net income from discontinued operations
Net income from discontinued operations (€ million) Selling price 360.0 - Assets and liabilities -148.0 - One-off expenses -64.9 Gain on disposal before income taxes 147.1 Income taxes -28.8 Gain on disposal after income taxes 118.3 DEUTZ Power Systems' current net income (after taxes) 5.6 Total 123
Slide 20: 2007: Segment overview
2007: Segment overview Unit sales Delta New orders (€ million) Delta 2007 2006 in % 2007 2006 in % Compact Engines 248,971 199,202 25.0 Compact Engines 1,203.9 950.4 26.7 DEUTZ Customised Solutions 36,890 37,477 -1.6 DEUTZ Customised Solutions 380.6 346.5 9.8 Total continuing operations 285,861 236,
Slide 21: DEUTZ makes strong gains in Q4 2007
DEUTZ makes strong gains in Q4 2007 Revenue and EBIT 2007 (€ million) EBIT margin: 4.3 % 6.8 % 8.0 % 5.8 % 423.5 382.3 383.0 335.4 14.4 26.0 30.6 24.5 Q1 Q2 Q3 Q4 Revenue and EBIT 2006 (€ million) EBIT margin: 6.0 % 6.9 % 4.9 % 5.1 % 366.1 292.2 255.4 269.9 15.2 18.5 14.3 18.6 Q1 Q2 Q3 Q4 21
Slide 22: Increase in employee numbers reflects growth course
Increase in employee numbers reflects growth course 20061) 20071) +6.6 % 851 Outside 829 Outside Outside Germany German 18% Outside Germany Germany 19% 333 Other locations 318 Other locations 542 Ulm 407 Ulm Germany Germany 2,777 81% 2,891 82% Cologne Cologne Total: 4,331 Total: 4,617 1) as at 31 De
Slide 23: Agenda
Agenda Highlights of financial year 2007 Dr Helmut Leube, Chairman of the Management Board Key performance indicators for 2007 Helmut Meyer, CFO Outlook for 2008 Dr Helmut Leube, Chairman of the Management Board Appendix 23
Slide 24: Positive outlook for 2008
Positive outlook for 2008 2007 2008 Unit sales (DEUTZ Group) 286,000 >300,000 (+10 %) Unit sales (DEUTZ Dalian) - 100,000 - 120,000 Revenue (€ million) 1,524.2 +10 to 15 % Revenue (DEUTZ Dalian) (€ million) - >300 EBIT margin (%) 6.3 ~7 Research and development (€ million) 56 80 Capital expenditure
Slide 25: Expansion of service business in 2008
Expansion of service business in 2008 Xchange USA: expansion of business in reconditioned engines ¦ Capital expenditure of €2.3 million for machines, leasing of factory workshop, hiring of 45 employees (start: H2 2008) ¦ Medium term capacity of 3,000 engines annually Xchange Germany: New constru
Slide 26: Challenges for 2008
Challenges for 2008 DEUTZ Dalian: First full financial year of the joint venture ¦ Secure supply of materials via Chinese suppliers ¦ Ensure a smooth start to DEUTZ engine production: goal of up to 20,000 engines ¦ Produce 80,000 to 100,000 engines using Chinese technology Improve profitability
Slide 27: DEUTZ The engine company
®) DEUT2Z The engine company.
Slide 28: Agenda
Agenda Highlights of financial year 2007 Dr Helmut Leube, Chairman of the Management Board Key performance indicators for 2007 Helmut Meyer, CFO Outlook 2008 Dr Helmut Leube, Chairman of the Management Board Appendix 28
Slide 29: Shareholder structure
Shareholder structure 42.2 % SAME DEUTZ-FAHR 6.7 % AB VOLVO 51.1 % Freefloat Number of shares1) 120,819,151 1) as at 29 February 2008, including 19,683,056 converted bonds 29
Slide 30: Income Statement
Income Statement DEUTZ Group: Delta Income statement (€ million) 2007 2006 (%) Revenue 1,524.2 1,183.6 28.8 Changes in inventories and other own work capitalised 30.1 22.5 33.8 Other operating income 66.7 52.1 28.0 Cost of materials -1,029.7 -758.9 35.7 Staff costs -275.0 -252.3 9.0 Depreciation and
Slide 31: Balance Sheet: Assets
Balance Sheet: Assets DEUTZ Group: 31 Dec. 31 Dec. Delta Assets (€ million) 2007 2006 (%) Non-current assets (before deferred tax assets) 511.3 499.1 2.4 Deferred tax assets 49.4 56.2 -12.1 Inventories 214.2 249.6 -14.2 Trade receivables 188.8 222.0 -15.0 Other receivables and assets 102.9 84.2 22.2
Slide 32: Balance Sheet: Equity and liabilities
Balance Sheet: Equity and liabilities DEUTZ Group: 31 Dec. 31 Dec. Delta Equity and liabilities (€ million) 2007 2006 (%) Equity 557.1 358.5 55.4 Provisions for pensions and other post-retirement benefits 176.7 271.2 -34.8 Other provisions/deferred tax provisions 46.5 52.5 -11.4 Financial liabilitie
Slide 33: Financial liabilities
Financial liabilities 31 Dec. 31 Dec. (€ million) 2007 2006 Profit-sharing rights1) - - Convertible bonds 2.7 20.8 Bond (US private placement) 190.1 - Liabilities to banks 28.5 60.2 Liabilities under finance leases 0.1 2.4 Total 221.4 83.4 1) 2007: €31 thousand. 33
Slide 34: Other operating income
Other operating income (€ million) 2007 2006 Income from recharged costs and services 37.8 32.3 Income from the settlement of pension claims 9.0 - Income from the reversal of warranty provisions following disposal of 5.0 - Marine Service business Exchange rate gains 3.2 1.6 Income from the measureme
Slide 35: Other operating expenses
Other operating expenses (€ million) 2007 2006 Expenses for general services 55.7 47.3 Special selling expenses 25.2 25.1 Cost of rentals and leases 13.2 13.6 Office, postal, telecommunications, advertising and other administrative 10.3 9.8 expenses Cost of fees, contributions and advice 12.3 10.3 E
Slide 36: Key performance indicators for 2007
Key performance indicators for 2007 (€ million) 2007 2006 Delta (%) New orders 1,834.1 1,631.3 12.4 of which from continuing operations 1,584.5 1,296.9 22.2 of which from discontinued operations 249.6 334.4 -25.4 Revenue 1,731.3 1,498.2 15.6 of which from continuing operations 1,524.2 1,183.6 28.8 o
Slide 37: Income statement (continuing operations)
Income statement (continuing operations) Q1 Q2 Q3 Q4 DEUTZ Group (€ million) 2007 2007 2007 2007 Revenue 335.4 382.3 383.0 423.5 Changes in inventories and other own work capitalised 18.2 10.9 13.8 -12.8 Other operating income 11.8 23.0 17.6 14.3 Cost of materials -232.3 -266.7 -264.0 -266.7 Staff c
Slide 38: Financial Dates 2008 / 2009
Financial Dates 2008 / 2009 Publication Report 1st Quarter 2008 30 April 2008 Conference call with analysts and investors Annual General Meeting Cologne 21 May 2008 Publication Report 1st Half-year 2008 13 August 2008 Press conference Cologne Conference call with analysts and investors Publi
Slide 39: Contact
Contact DEUTZ AG Investor Relations & Public Relations Ottostrasse 1 51149 Cologne (Porz-Eil) Phone: +49 221 822-2492 Fax: +49 221 822-2498 www.deutz.com 39
Slide 40: Disclaimer
Disclaimer 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. Such discrepancies may be caused by changes in political, economic or business conditions, a decrea