Deutz is forecasting low double-digit revenue growth in 2014 after describing 2013 as an “encouraging year” for the German company.
Last year saw improvements in all the diesel engine manufacturer’s key performance figures, despite the sluggish global market.
And the company says tipped 2014 revenue growth is likely to be coupled with a moderate improvement in the EBIT margin excluding one-off items, which the firm expects to rise to above 4.0%.
In 2013, the Deutz Group received orders worth €1,649.7 mil
Last year saw improvements in all the diesel engine manufacturer’s key performance figures, despite the sluggish global market.
And the company says tipped 2014 revenue growth is likely to be coupled with a moderate improvement in the EBIT margin excluding one-off items, which the firm expects to rise to above 4.0%.
In 2013, the Deutz Group received orders worth €1,649.7 million, which was 33.4% above the previous year's figure of €1,237.1 million and a new record for the company in its present structure. The growth in new orders, particularly in the Agricultural Machinery and Mobile Machinery application segments, was attributable to success with new customers, the increasing proportion of higher value products and the advance production of engines in anticipation of new emissions standards.
Meanwhile, Deutz sold 184,028 engines, outstripping unit sales in 2012 by 2.9% (178,774 engines). Much of this was said to be down to the strong performance in the Agricultural Machinery application segment. There was also a significant increase in revenue. In 2013, Deutz generated a 12.5% rise in revenue, taking it to €1,453.2 million compared with €1,291.9 million in 2012. This means that revenue rose at a stronger rate than unit sales, primarily on the back of sales of higher-value engines that meet the new emissions standards.
Operating profit (EBIT) for 2013 was up by 28% to €47.5 million, an increase of €10.4 million on the previous year’s €37.1 million. As a result, the EBIT margin went up from 2.9% to 3.3%. This positive trend was driven by a significant increase in business volumes as well as improved earnings from equity-accounted investments. Revenue generated by Deutz’s biggest investment in China, Deutz (Dalian) Engine Co, rose by more than 30% to the equivalent of €319 million, and resulted in a positive contribution to earnings.
“Our success in China is the result of greater market acceptance, combined with our successful efficiency programme and quality offensive,” said Deutz CFO Dr Margarete Haase.
Net income increased from €21 million in 2012 to €36.0 million in 2013. Free cash flow continued to improve, rising by €1.2 million on the previous year, and amounted to €13.8 million in 2013. As a result, net financial debt fell by €16.9 million and stood at €31.7 million at the end of the year.
In Q4 2013, Deutz reported Sharp rises in new orders, unit sales and revenue compared with the same period in 2012. New orders totalled €446.1 million, a 61.3% rise on the final quarter of 2012, and 49,329 engines were sold, which was 6.0% more than in the same prior-year period. Revenue was also up significantly, with fourth-quarter revenue of €410.1 million - more than 25% higher than in the same quarter the previous year (Q4 2012: €322.5 million). Operating profit (EBIT) jumped to €20.3 million from €13.7 million in Q4 2012.
In the current year, Deutz says earnings will be boosted by growth in revenue combined with economies of scale and measures to cut costs and boost efficiency at Deutz and at the Chinese joint venture Deutz Dalian. However, there will be a continuing negative impact from product start-ups and the set-up costs for growth projects in China.
"The results for 2013 reflect the fact that the measures initiated in previous years have been implemented as part of our strategic repositioning. Our product offensive had a particularly positive impact in 2013, and we are well equipped for the future with our activities in the growth market of China. On this basis, we are confident that the Deutz Group will continue to grow successfully," said Dr Helmut Leube, chairman of the Deutz Board of Management.
