DEUTZ AG Deep Dive | CEO on Innovation, Challenges & Strategy

Welcome to an Exclusive Conversation with DEUTZ AG CEO Sebastian Schulte

In this insightful discussion, we dive deep into the company’s 160-year legacy, its 125th anniversary of stock exchange listing, the challenges and achievements of 2024, and the company’s vision for the future. DEUTZ AG, a pioneer in engine innovation, is not only navigating economic shifts but also reinforcing its commitment to sustainability, strategic growth, and technological advancements under the leadership of Sebastian Schulte.

Milestone Celebrations: 160 Years of DEUTZ & 125 Years on the Stock Exchange

Reflecting on the company’s rich history, Schulte underscores the profound significance of these anniversaries for both employees and stakeholders. Founded by Nicolas August Otto, the inventor of the four-stroke engine principle, DEUTZ AG has built a global reputation for engineering excellence and resilience. The company’s first stock exchange listing 125 years ago was a monumental step that enabled growth, innovation, and global expansion.

Throughout its history, DEUTZ has embraced change, diversity, and internationalization. While the company has undergone various transformations, one thing has remained constant: its role as a driving force in industrial innovation.

The Challenges & Successes of 2024

Market Challenges in 2024

Schulte offers a candid assessment of 2024’s market conditions, acknowledging that it was a challenging year due to economic downturns, particularly in Europe. Key challenges included:

• A 25% decline in engine sales compared to the previous year.
• A 12% decrease in revenue, bringing total revenue to €1.814 billion.
• The European market was hit hardest, especially in construction and agriculture.

Resilience and Strategic Profitability

Despite these setbacks, DEUTZ demonstrated its resilience and strategic decision-making by remaining profitable. The company reported an EBIT before exceptional items of €76.7 million, reflecting a 4.2% EBIT margin—a significant achievement given the economic climate. Unlike in previous downturns, when margins nearly disappeared, DEUTZ successfully maintained profitability through cost-cutting measures, efficiency improvements, and strategic partnerships.

Key Strategic Moves in 2024

Expanding the Service Business

DEUTZ focused on growing its most profitable segment—service business—to drive long-term stability.

Strengthening Industry Partnerships

Strategic collaborations played a crucial role, including:

• A partnership with Daimler Truck.
• The takeover of Rolls-Royce Power Systems’ engine portfolio.

Diversifying Revenue Streams

Entering new markets, such as power generation, was a key focus, including the acquisition of US-based Blue Star Power Systems.

What Made DEUTZ Proud in 2024?

Looking back, Schulte highlights several achievements:

• The 160th anniversary celebration brought together employees worldwide.
• The company successfully balanced growth initiatives with cost efficiency.
• DEUTZ remained profitable despite market challenges.
• The launch of the updated Dual+ strategy set the foundation for long-term growth.

The Evolution of the Dual+ Strategy

In response to structural shifts in 2024, DEUTZ refined its Dual+ strategy to:

• Stay closer to customer demands by developing customized solutions rather than just products.
• Reduce reliance on cyclical markets by diversifying business segments.
• Expand into power generation through the acquisition of Blue Star Power Systems.

Schulte explains that the demand for decentralized energy solutions is rising, especially in industrialized nations like the United States, where energy grids are becoming increasingly unstable. The Blue Star Power Systems acquisition provided DEUTZ with a strong market position and immediate growth potential.

The Future of the Combustion Engine Market

While electrification is transforming mobility, Schulte emphasizes that the off-highway sector (e.g., construction, agriculture, and heavy industry) will continue to rely on combustion engines for the foreseeable future. DEUTZ sees significant opportunities in high-power engines and is actively consolidating its position through:

Key Acquisitions & Partnerships

• The acquisition of Daimler Truck’s off-highway engine portfolio.
• A 50% stake in HJS Emission Technology, ensuring a more resilient supply chain.
• A partnership with Indian tractor manufacturer TAFE to expand DEUTZ’s presence in emerging markets.

The Growing Importance of DEUTZ’s Service Business

DEUTZ is heavily investing in its service division, aiming to double service revenue from €500 million to €1 billion by 2030. This expansion strategy includes:

• Acquisitions in key markets where DEUTZ already has a presence.
• Diversifying service offerings to include digital solutions and third-party maintenance.
• Enhancing aftersales support to drive customer loyalty.

DEUTZ’s Vision: Doubling Revenue to €4 Billion by 2030

Schulte reveals that DEUTZ aims to double its total revenue to €4 billion by 2030, a goal that requires:

• Aggressive expansion into new business areas.
• Strategic acquisitions to accelerate growth.
• Streamlined decision-making processes to enhance agility.
• Strong employee engagement, with over 20 global workshops in 60 locations, ensuring alignment with the Dual+ strategy.

Final Thoughts & Looking Ahead

As the discussion concludes, it’s clear that DEUTZ AG remains committed to innovation, resilience, and long-term growth. Despite economic headwinds, the company has:

• ✅ Maintained profitability during a downturn.
• ✅ Expanded into new markets like power generation.
• ✅ Strengthened its service business, the most profitable segment.
• ✅ Secured strategic partnerships and acquisitions to future-proof operations.

With a clear roadmap and a commitment to customer-driven solutions, DEUTZ is well-positioned to continue shaping the future of industrial engines and energy solutions.

👉 Stay tuned for more insights from industry leaders and innovators shaping the future of engineering, sustainability, and global markets!