During the CFO perspective segment of DEUTZ AG’s Capital Market Day
Oliver Neu outlined the financial roadmap that aligns with the company’s Dual+ strategy. He focused on how DEUTZ aims to achieve sustainable growth while maintaining financial discipline. The primary goals are to support the ambitious revenue target of €4 billion by 2030 and ensure that by 2028, the company reaches €3.2 to €3.4 billion in revenue with an adjusted EBIT margin of 8-9%.
Key Highlights from Neu’s Presentation:
1. Growth and Revenue Targets
DEUTZ has set a path for revenue growth in three core areas: Classic Engines, Service, and Solutions. The strategic focus on expanding service offerings and energy business through strategic M&A and organic growth is a clear indication of our optimism about the company’s growth potential.
The Classic business, supported by recent Rolls-Royce Power Systems acquisitions, is expected to contribute significantly, especially with market recovery and portfolio adjustments.
2. Cost Reduction and Structural Efficiency
Neu introduced a €50 million cost reduction program aimed at long-term, sustainable cost improvements. This includes reducing R&D spending in the New Tech segment and streamlining the company’s global operations, targeting a more efficient supply chain.
The company aims to achieve €20 million in savings by 2025 and an additional €30 million by 2026, helping improve overall margins.
3. Capital Structure and Financing M&A
M&A plays a key role in DEUTZ’s growth strategy, particularly in expanding service and energy businesses. Neu emphasized that M&A efforts will be tailored and focus on high-margin, growth-oriented companies like Blue Star Power Systems, which was recently acquired.
Neu assured that DEUTZ will continue its disciplined approach to capital allocation. The company maintains a strong equity ratio above 40%, allowing room for further investments while optimizing its financial leverage (targeting a leverage ratio of 1-2x EBITDA).
4. Increased Shareholder Value
Neu highlighted DEUTZ’s commitment to improving free cash flow through operational performance, reducing CapEx intensity in new businesses, and improving working capital management. This commitment reassures our stakeholders about the company’s strong financial health and its ability to finance growth while increasing dividends for shareholders.
The company has updated its dividend policy, aiming for stable or growing dividends that reflect its improved company and profitability.
5. Financial Reporting and Segment Restructuring
From 2025, DEUTZ will restructure its segment reporting to reflect the new engines & services and solutions categories. This will allow for clearer visibility into the performance of traditional and future-focused businesses like energy and new tech.
Conclusion
Neu’s presentation focused on ensuring that DEUTZ can sustain profitable growth while remaining financially flexible to seize new opportunities in energy and technology markets. By controlling costs and optimizing the balance sheet, DEUTZ plans to maximize shareholder returns and expand globally in the energy sector, reaffirming our commitment to our shareholders’ investment.