DEUTZ announces financial results for the first quarter of 2015

• Business performance in line with expectations

• Decline in unit sales and revenue due to effects of advance production of engines in prior-year period

• Five-fold increase in operating profit

Having released preliminary results on 24 April 2015, DEUTZ AG published its interim report for the first quarter of 2015 today. The new orders received by the DEUTZ Group during the reporting period totalled €321.0 million, which was down by 22.5 per cent year on year (Q1 2014: €414.2 million). The first quarter was the strongest of the four quarters last year because of the high demand for engines ahead of the latest EU exhaust emissions standard. In the first quarter of 2015, new orders surpassed the figure for the fourth quarter of 2014 (€302.2 million) by 6.2 per cent.

Unit sales fell by 17.0 per cent, from 44,457 engines in the first three months of last year to 36,907 engines in the same period of this year. DEUTZ had also sold more engines in the previous quarter (Q4 2014: 41,304).

Revenue amounted to €318.1 million, down by 7.2 per cent on the figure of €342.7 million reported a year earlier. The Americas and Asia-Pacific regions achieved revenue growth, whereas the EMEA region (Europe, Middle East and Africa) saw a decline. DEUTZ registered increases in the Stationary Equipment application segment and the service business, but decreases in the Mobile Machinery and Agricultural Machinery application segments. Revenue had amounted to €352.3 million in the fourth quarter of 2014.

Despite the reduction in revenue, there was a five-fold rise in operating profit (EBIT), which climbed from €1.9 million to €10.1 million. This represents an EBIT margin of 3.2 per cent. There were no one-off items in the period under review. The increase in the margin is in large part due to the positive impact from changes in exchange rates. Other reasons were growth in revenue from the service business and lower production costs and warranty costs. These positive factors outweighed the diseconomies of scale from the reduction in revenue that had been anticipated. Net income for the first three months of this year amounted to €7.7 million, which was up by €8.3 million compared with the prior-year period (Q1 2014: net loss of €0.6 million). This resulted in earnings per share of €0.07 (Q1 2014: €0.00). "Our business performance in the first quarter of 2015 was in line with our expectations. The action taken to increase productivity is working, while changes in exchange rates are boosting our earnings," explained DEUTZ's Chief Financial Officer, Dr Margarete Haase.

"We now have a substantial competitive edge thanks to our fully upgraded product portfolio. All of the TCD engines with diesel particulate filters in the 2.9 to 7.8 litre cubic capacity range already meet the limits that are to be expected from 2019 according to the European Commission. To make this message clear to the market, we have named our recently launched product campaign 'Stage V ready'," said Dr Helmut Leube, Chairman of the Board of Management of DEUTZ.
DEUTZ expects 2015 to be a year of transition dominated by lower demand resulting from the aforementioned advance production of engines in 2014. The Company is therefore forecasting that revenue will decline by around 10 per cent compared with 2014 and that the EBIT margin (before one-off items) will improve slightly to roughly 3 per cent.