Deutz Ag · XETR:DEZ
Deutz — Investor Presentation (May 2016)
35 slides from Deutz's investor presentation, May 2016
Slide 1: DEUTZ Investor Presentation May 2016
DEUTZ Investor Presentation May 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 DEUTZ engine portfolio will satisfy the next EU emissions standard announced for 2019 “Stage V ready” Expanding product range for Stage V: New
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 clients & greater share of wallet (not exhaustive) New customers attracted by the 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 107 106 DDE is a 50:50 JV with FAW 100 89 75 producing diesel
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 Q1 2016 yoy qoq € million New orders 327.3 2.0% 11.7% Revenue 300.2 -5.6% -2.7% EBITDA 31.3 -7.7% +17.7% EBIT 7.3 -€2.8 million +€13.0 million Net income 8.7 +€1.0 million +€12.5 million 20
Slide 21: Sales figures
Sales figures New orders Unit sales Revenue € million Units € million 2.0% -13.0% -5.6% 321.0 327.3 36,907 318.1 3,312 32,112 300.2 72.1 67.9 2,342 67.1 64.7 33,595 29,770 248.9 259.4 251.0 235.5 Q1 2015 Q1 2016 Q1 2015 Q1 2016 Q1 2015 Q1 2016 Revenue decreased to a lesser extent than unit sales due
Slide 22: Revenue by quarter
Revenue by quarter € million 410.7 424.5 342.7 352.3 352.1 318.1 308.6 300.2 268.6 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Advance production of engines ahead of changes to European emissions standards for engines < 130 kW in October 2014 with significant influence on revenue We antici
Slide 23: Operating profit & net income
Operating profit & net income Q1 2015 Q1 2016 € million 33.9 23.8 31.3 24.0 10.7% 10.1 1.1 1.3 10.4% +2.3 8.7 7.7 7.3 0.9 EBITDA D&A EBIT Net Income Net EBITDA D&A EBIT Net Income Net interest taxes income interest taxes income expense expense Operating profit benefitted from licence proceeds by €5.
Slide 24: EBIT
EBIT € million 10.1 7.3 -6.3 +4.3 -0.8 Q1 2015 Q1 2016 EBIT margin 3.2% 2.4% EBIT decline at DEUTZ Compact Engines mainly attributable to lower capacity utilisation and FX Licence proceeds at DEUTZ Customised Solutions largely compensated lower business volume Prior year result at segment Other was
Slide 25: Segment: DEUTZ Compact Engines
Segment: DEUTZ Compact Engines Q1 Q1 Change Q1 Q4 Change € million 2016 2015 in % € million 2016 2015 in % New orders 259.4 245.9 4.2 New orders 259.4 234.4 10.7 Unit sales 29,770 33,595 -11.4 Unit sales 29,770 27,618 7.8 Revenue 235.5 251.0 -6.2 Revenue 235.5 237.1 -0.7 EBIT -2.3 4.0 -- EBIT -2.3 -
Slide 26: Segment: DEUTZ Customised Solutions
Segment: DEUTZ Customised Solutions Q1 Q1 Change Q1 Q4 Change € million 2016 2015 in % € million 2016 2015 in % New orders 67.9 72.1 -5.8 New orders 67.9 58.6 15.9 Unit sales 2,342 3,312 -29.3 Unit sales 2,342 2,927 -20.0 Revenue 64.7 67.1 -3.6 Revenue 64.7 71.5 -9.5 EBIT 10.2 11.0 -7.3 EBIT 10.2 5.
Slide 27: R&D spending & capital expenditure
R&D spending & capital expenditure R&D Capital expenditure (excl. R&D) € million 13.7 16.0 Gross expenditure 2.8 10.8 Reimbursements 0.7 8.5 Net expenditure 0.1 10.9 10.1 8.4 Net R&D Q1 2015 Q1 2016 Q1 2015 Q1 2016 expenditure ratio(1) 3.4% 3.4% R&D remain at moderate level Capital expenditure incre
Slide 28: Working capital & operating cash flow
Working capital & operating cash flow Working capital Operating cash flow € million 245.4 229.4 12.4 -8.0 Working Q1 2015 Q1 2016 Q1 2015 Q1 2016 capital ratio (31 March) 16.3% 18.7% Increase of working capital ratio related to Operating cash flow decline mainly due to lower revenue decline in the s
Slide 29: Free cash flow generation & net financial position
Free cash flow generation & net financial position Free cash flow(1) Net financial position € million 35.0 15.5 9.7 7.2 2015 Q1 2016 (LTM) Q1 2015 Q1 2016 Free cash flow of last twelve months decreased Net financial position remains positive by €27.8 million (1) Free cash flow: cash flow from operat
Slide 30: Equity ratio & funding
Equity ratio & funding € million 1,088.1 1,099.6 45.5% 45.1% 495.6 495.4 160 15 16 39 1 2015 Q1 2016 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 remained strong Medium- to long-term financing
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 33
Slide 34: Financial calendar & contact details
Financial calendar & contact details 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 SVP Finance, Public and Investor Relations Fax:+49 (0) 221 822 15 5400 Ottostrasse 1 Email: kr
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.