Deutz reports 2020 loss as Covid-19 impacts sales
By Ian Cameron18 March 2021
Company details sales slump but reports brighter performance in Quarter 4
Deutz has reported a net loss of €107.6 million in 2020, a decline of €159.9 million compared with the net income of €52.3 million in the previous year.
Amid a COVID-19 dominated year the German engine-maker reported unit sales of 150,928, a year on year decline of 28.7% although it said there has been a “significant improvement in operating profit” in the fourth quarter of 2020 compared with the previous quarter due to a pick up in demand.
The company said that in 2020, the value of new orders received fell by 20.1% to €1,322.5 million. It added that new engine business was adversely affected by the huge slump in demand as a result of the coronavirus crisis and by the high number of engines that had been sold in 2019 before new emissions standards came into force.
However, there was a very encouraging sharp rise in orders of 14.7% in the fourth quarter, it said.
Deutz chief executive Dr Frank Hiller said:“We continued with our strategic growth initiatives in what proved to be a challenging year.
“The positive performance of our Chinese joint venture with Sany and the development alliance with John Deere, which we announced at the end of the year, demonstrate that we can look to the future with confidence.
“Over the coming months, we expect to see a recovery in our main sales markets. From a current perspective, however, it appears likely that they will need a long time to return to their pre-crisis levels.”
The company said the joint venture with Sany, China’s biggest construction equipment group, “notched up some early success” by generating a profit in its first year. The production volume is set to be increased from around 20,000 engines in 2020 to around 40,000 engines in 2021.
At the end of the second quarter of 2020, Deutz said it increased its revenue target for China for 2022 from approximately €500 million to around €800 million on the grounds that market demand is already on a par with the production volume planned for the joint venture and in light of the expected further gains in market share.
It added that significant progress was also made with the global expansion of the high-margin service business, which, it said, is a key pillar of the growth strategy. Under this strategy, Deutz acquired Deutz Austria GmbH, Motorcenter Austria GmbH, and Pro Motor Servis CZ at the start of the fourth quarter of 2020.
These former subsidiaries of the Austrian company PRO MOTOR Beteiligungsgesellschaft mbH sell and service diesel engines in Austria, the Czech Republic, Hungary, Slovakia, and Slovenia, providing DEUTZ with direct access to the markets in these countries.