Deutz navigates economic headwinds with positive EBIT

COLOGNE - DEUTZ AG, the German engine manufacturer, has reported a stable fourth quarter and met its adjusted guidance for 2024 despite a challenging economic climate. The company announced its annual results today, showing a revenue decline of 12.1% to €1.813 billion but maintaining a positive adjusted EBIT (earnings before interest and taxes) of €76.7 million, which translates to an adjusted EBIT margin of 4.2%.

The company’s new orders saw a slight increase of 4.4% to €1.827 billion, attributed to the strategic expansion of its portfolio, including the acquisition of US genset maker Blue Star Power Systems and certain off-highway business segments from Rolls-Royce (OTC:RYCEY) Power Systems. DEUTZ’s CEO Dr. Sebastian C. Schulte credited the company’s diversified strategy for its ability to remain profitable during difficult economic times.

In line with its Dual+ strategy, DEUTZ is aiming for a revenue target of approximately €4 billion by 2030. The strategy focuses on diversifying the portfolio, entering the decentralized energy supply market, and expanding global service businesses.

The company also implemented an efficiency program aimed at reducing its workforce by 300 positions with minimal social impact and cutting operating costs to achieve sustainable savings of €50 million annually by the end of 2026. This program, dubbed Future Fit, is expected to consolidate the cost-reduction measures initiated in 2024.

DEUTZ has proposed to maintain its dividend at €0.17 per share for the 2024 financial year, marking at least four years of consistent dividends, with a dividend ratio just over 40%.

Despite the decrease in unit sales by 23.9% in the Classic segment, the company’s revenue reduction was less severe due to higher unit prices and the expansion of its service business not reflected in unit sales. The revenue contributions from Blue Star Power Systems and the former Rolls-Royce Power Systems activities have exceeded initial expectations.

The company reported a net income of €42.0 million for 2024, a decrease from €106.9 million the previous year, with earnings per share falling to €0.32 from €0.86. The equity ratio improved to 50.4%, and the company’s cash flow from operating activities totaled €110.4 million.

Looking ahead, DEUTZ anticipates a revenue between €2.1 billion and €2.3 billion for 2025, with an adjusted EBIT margin of 5.0% to 6.0%, assuming a market recovery in the second half of the year. Free cash flow before M&A expenditure is expected in the mid-double-digit millions of euros.

This article is based on a press release statement from DEUTZ AG.

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