In a video update, Christian Ludwig, the Head of Communications and Investor Relations at Deutz AG, takes you through the company’s financial results for the first half of 2023.
Christian began by quickly giving a sneak peek into key operational and strategic developments. In a rather unexpected turn, new orders slightly decreased compared to the previous year, coming in at just under a billion. However, unit sales for Deutsche engines rose, albeit a modest one of 1.1%.
The company’s revenues painted a brighter picture, surging by 10% to surpass the billion mark. Another shining star for Deutz AG was the significant hike in their adjusted EBIT, which rocketed by almost 20 million to a staggering 62.5 million. This translates to an EBIT margin of 6.1% and is an improvement of 1.5% compared to the previous year.
Cash flow, often regarded as a business’s lifeline, also reflected positive dynamics. Deutz AG’s free cash flow soared, marking an improvement of 33 million year-over-year. Consequently, after six months, they posted a positive free cash flow of 8.3 million. These robust figures paved the way for the company to confirm its guidance for 2023 confidently. The expected revenue is hovering around 2.1 billion, with an adjusted EBIT margin approximating 5%.
Christian shared the exciting news of expanding their service network through two key acquisitions: a partner in Chile and Diesel Motor Nordic in the Nordic states of Europe. He emphasized the company’s commitment to eco-friendly operations, highlighting the progress of their ‘green stature’. The firm has been continuously expanding its green project pipeline, which includes ten battery electric system projects and five hydrogen ventures. This aligns with the company’s ambitious goal of being emission-free across the entire process chain by 2050.
Service, an essential segment for Deutz AG, reported impressive numbers. Revenue increased by 6.4%, translating to almost 240 million. The company has been aggressively expanding its in-house service network and managed to seal two acquisitions to bolster its regional presence in South America and Northern Europe.
Christian also provided an in-depth analysis of the company’s performance in the US and Northern Europe, revealing that the revenue target for their nine service centres in the US, termed DPCs, stands at around 50 million for 2023. He proudly announced the acquisition of their services partner, Whole Field, based in Chile, expected to contribute approximately 50 million in annual revenue. Another addition, Diesel Motor Nordic is also anticipated to add about 10 million annually in service revenue.
Peeling back the layers of their financial health, Christian delved deep into some core numbers. Despite the new orders being slightly down from the previous year due to large placements from the year before, the company remained undeterred. A minor decline in unit sales was mainly attributed to their Torquito business with boat drives. However, the revenue numbers were notably more promising, showcasing a growth of 10%.
The last leg of the presentation steered towards key performance indicators and balance sheet figures. The equity ratio was healthy at 44.6% as of June’s end, and they have significant unused lines of credit, ensuring their financial solidity.
To wrap up his presentation, Christian reiterated the company’s guidance for 2023, which projects the sale of approximately 195,000 Deutsche engines, leading to revenues near the 2.1 billion mark and an adjusted EBIT margin close to 5%. He also confirmed the medium-term targets based on their Duo Plus strategy for 2025, targeting revenue of 2.5 billion.