DEUTZ AG Financial Results FY 2024 | Strategic Resilience, Future Innovations

DEUTZ AG FY 2024: Key Takeaways

DEUTZ AG’s Strong Financial Performance in 2024: A Comprehensive Analysis

In this comprehensive presentation, Mark Schneider, Head of Investor Relations at DEUTZ AG, provides an in-depth analysis of the company’s successful financial performance for 2024, aligning with the adjusted guidance issued in October 2024. The results reflect DEUTZ’s resilience and strategic advancements in a challenging economic environment, reassuring our stakeholders about the company’s stability and growth potential.

Key Financial Highlights for 2024

Total Unit Sales: 142,970 engines, slightly below the anticipated 150,000 units, primarily due to economic headwinds.
Revenue: €1.814 billion, meeting the adjusted guidance of approximately €1.8 billion.
Adjusted EBIT Margin: 4.2%, within the projected 4-5% range.
Free Cash Flow: €30 million, surpassing the expectation of a balanced cash flow.

Strategic Business Developments

Schneider emphasizes the successful implementation of DEUTZ’s Dual+ Strategy, focusing on diversifying the portfolio and regional presence. Notable strategic actions in 2024, which demonstrate our adaptability and future direction, include:

Portfolio Optimization

DEUTZ strategically adjusted its portfolio by:

Divesting Torqeedo GmbH, a specialist in electric marine propulsion systems.
Acquiring Blue Star Power Systems in the USA to strengthen its footprint in the energy sector.

Product Line Expansion

The integration of Daimler Truck Off-Highway (DTO) engines, now rebranded as DEUTZ engines, has broadened the product offering and attracted new clients such as:

Ponsse
Claas
Bell Equipment

Cost Efficiency Initiatives

The Future Fit Program, DEUTZ’s cost reduction and efficiency initiative, is projected to yield sustainable savings of:

€50 million annually from 2026 onwards.
€20 million anticipated in 2025.

Growth in Service and Energy Segments

Expansion of the Service Business

The service business demonstrated robust growth, achieving €512 million in revenue in 2024, with ambitious targets:

Exceeding €550 million in 2025.
Aiming for €600 million in subsequent years.

Key developments in the service sector include:

Integration of DEUTZ Nordic (formerly Diesel Motor Nordic) and DEUTZ Chile (formerly Maqi).
Acquisition of B.W. Forest in Poland, including a defense segment supplying vehicles to Ukraine.

Expansion in the Energy Sector

DEUTZ is strengthening its DEUTZ Solutions segment by developing tailored new technology offerings such as battery-electric engines. A major milestone was:

Acquiring Blue Star Power Systems to enter the U.S. energy market.
Targeting the generator set market, driven by:
- Inadequate infrastructure.
- Increasing severe weather events.
- Energy transitions.
- Reshoring of production to the U.S.

Outlook for 2025 and Beyond

DEUTZ projects a positive trajectory for 2025, with expectations of market stabilization in the agriculture and construction sectors, supported by infrastructure programs in Germany and potential developments in Ukraine.

Forecasts for 2025

Revenue: €2.1 to €2.3 billion.
Adjusted EBIT Margin: 5 to 6%.
Free Cash Flow: Mid-double-digit million-euro amount.

Mid-Term Targets for 2028

Revenue: €3.2 to €3.4 billion.
Adjusted EBIT Margin: 8 to 9%.

New Dividend Strategy

DEUTZ has adopted a new dividend strategy to ensure stable or increasing dividends compared to the previous year.

125 Years on the Stock Market

Celebrating its 125th anniversary as a publicly listed company, DEUTZ reflects on its legacy while focusing on future growth and innovation. This milestone underscores its commitment to sustainable development and technological advancement.

Chapters

Results in line with the adjusted guidance
What we take away from 2024
Positive effects of Dual+ strategy visible in the earnings
Cyclical decline in engine sales from 187k to 143k units
Realignment of our Dual+ strategy for the next phase
Good progress in the Classic segment
Expansion of the engine portfolio for medium-duty and heavy-duty engines
Service with continuous growth
Why we are setting up a new segment DEUTZ Solutions
DEUTZ New Technology with good progress and clear positioning for growth
Entry into Energy business
Immediate earnings contribution from Blue Star Power Systems in 2024
Segment structure from 2025 onwards
New segment reporting from Q1 2025 reflects revised Dual+ strategy
Global market forecasts 2025
Guidance: Positive development expected in the 2025 financial year
Solutions expected to grow at 30% CAGR until 2030
Sales growth and further development of the business model to lead to a 10% EBIT margin by 2030
With our 2025 guidance, we confirm our mid-term targets for 2028
Medium-term targets for 2028 are based on adjusted Dual+ strategy
Review 2024: Solid performance as a result of strategy implementation and cost measures

Resources

Host

Mark Schneider
Head of Investor Relations | DEUTZ AG

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