Deutz New Engine Orders Slipped In 2015

Deutz AG announced its financial results for 2015, reporting that new orders amounted to €1225.9 million, down 11.1% on the prior year. At the same time, orders in the service business were up by 7.2%, whereas all other application segments reported a decrease in new orders compared with 2014.

The number of engines sold fell by 29.8%, from 196,403 in 2014 to 137,781 in 2015. The year-on-year decline in unit sales was particularly pronounced in the agricultural machinery and mobile machinery application segments, the company said. Revenue dropped 18.5% to €1247.4 million.

According to Deutz, that trend was attributable first to the effect of the advance production of engines that European customers had purchased in 2014 before the new emissions standards for engines below 130 kW came into force. Secondly, Deutz said it has been affected by a distinct reluctance to invest on the part of end customers since the second half of 2015.

Despite the lower level of capacity utilization, Deutz generated an operating profit (EBIT before one-off items) of €4.9 million, compared to €31.7 million in 2014. The EBITDA margin (before one-off items) remained on a par with 2014 at 9.0% and net income came to €3.5 million versus €19.5 million in 2014.

“This is consistent with our strategic objective of operating profitably even during downturns in the business cycle and underlines the effectiveness of the efficiency measures that we have initiated,” said Deutz‘ Chief Financial Officer, Dr. Margarete Haase.

Deutz said it continues to maintain a very sound balance sheet, with an equity ratio that went up slightly, reaching 45.5% at the end of 2015, compared with 44.5% at the end of 2014.

“We will continue to focus on increasing efficiency and quality,” said Dr. Helmut Leube, chairman of the company’s board of management. “The measures to optimize our network of sites in Germany are running to plan and we have forged ahead with the consolidation of our sites in China. Our engine portfolio is at the cutting edge of technology and we are adding a 2.2 L diesel and gas engine.”

Deutz expects market conditions to remain challenging in 2016. Consequently, it forecasts that revenue will stagnate or at best, rise slightly.

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