DEUTZ AG Elevator Pitch | Driving Sustainable Growth And Innovation With IR

DEUTZ AG Elevator Pitch: Key Takeaways

In this comprehensive investor presentation

Mark Schneider, the Head of Investor Relations at DEUTZ AG, elaborates on the company’s strategic vision and operational performance as of October 2024. DEUTZ AG, a unique entity as one of the oldest independent engine manufacturers globally, positions itself as a key player in driving technological advancements for off-highway applications. Established over 160 years ago, the company continues to innovate, focusing on both traditional and sustainable engine technologies to ensure the world “keeps moving.”

Our Mission

DEUTZ aims to lead the way in providing off-highway engine solutions, leveraging both conventional and alternative fuel technologies. This mission drives its continuous investments in research and development (approximately €100 million annually), reinforcing its position in the engine manufacturing space.

About Us

Founded in 1864, DEUTZ AG operates globally from its headquarters in Cologne. The company is renowned for its diverse product portfolio, which includes diesel and gas engines as well as electric and hydrogen-powered systems, serving a variety of off-highway industries. With over 5,000 employees worldwide, the company posted revenues of €2.1 billion in 2023. DEUTZ remains a leader in traditional combustion engines while aggressively investing in the future of alternative powertrain solutions.

Competitive Environment

DEUTZ currently ranks fourth in the global off-highway engine manufacturing sector, positioning itself alongside competitors such as Cummins and Yanmar. The company is determined and ambitious, aiming to further consolidate its standing in the top three by 2030. This strategic ambition is based on a combination of expanding its technological footprint and securing a larger market share in traditional and new technologies.

DEUTZ Customers

DEUTZ’s customer base includes industry-leading Original Equipment Manufacturers (OEMs) across multiple sectors, such as construction, material handling, and agricultural equipment. These include household names like Volvo Construction, Wacker Neuson, and Fendt. The company’s client portfolio reflects its diversified revenue streams, with construction contributing 33%, material handling 25%, and agriculture 13%.

Fields of Application

DEUTZ’s engines are versatile and used in a variety of fields including construction, material handling, agriculture, and stationary systems for decentralized energy supply. They run on a wide range of fuels, including diesel, CNG, LPG, electric, and hydrogen. This diversity in applications and fuel types underscores DEUTZ’s commitment to offering flexible, future-proof engine solutions that adapt to different industries’ evolving needs.

Margin Performance and Resilience

Despite the challenges of a highly cyclical market, DEUTZ has demonstrated resilience. Its margins have strengthened in recent years, with the company projecting a margin of 4-5% for 2024, a significant improvement from the historical low of 2% EBIT margin in 2014. This enhancement is a testament to DEUTZ’s ability to navigate market cycles, implement strategic cost controls, and focus on high-margin sectors like decentralized energy and alternative drivetrains.

Opportunities for Profitable Growth

DEUTZ AG is well-positioned to capitalize on several global megatrends, including urbanization, climate protection, and digitization. Rising demand for efficient agricultural machinery, infrastructure development, and the localization of supply chains further contribute to its growth potential. DEUTZ is leveraging these trends to drive innovation, expand its market share, and diversify its revenue streams.

Future Growth Plans

By 2025, DEUTZ aims to grow its revenue to approximately €2.4 billion, with ambitions to expand further to €4 billion by 2030. This growth will be driven by a balanced portfolio that includes traditional combustion engines and sustainable technologies like hydrogen and electric drivetrains. Additionally, the company plans to enhance its service business, which has contributed significantly to its earnings.

2030 Revenue Ambition

DEUTZ projects significant revenue growth through organic expansion and strategic acquisitions. Solutions like decentralized energy and alternative drivetrains are expected to grow at a 30% CAGR, contributing more than €500 million in revenue by 2030. The service business is expected to grow in tandem, contributing 25% of revenue while bolstering profitability. Meanwhile, the classic engine business is expected to grow in absolute terms but represent a smaller share of overall revenue as DEUTZ pivots towards greener technologies.

Chapters

Our mission
About us
DEUTZ in the competitive environment
DEUTZ Customers
DEUTZ fields of application
Our margin performance remains resilient and more robust than in the past
We are in an environment which is dynamic and offers opportunities for profitable growth
Looking ahead to the second horizon we need to continue to grow – size matters
Strong 2030 revenue ambition

Resources

Host

Mark Schneider
Head of Investor Relations | DEUTZ AG

Rolf Becker
Investor Relations | DEUTZ AG

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