Deutz reports 11% Q3 revenue growth, 100-unit H2 order
09 November 2023
Drive system manufacturer Deutz saw revenue in Q3 2023 rise by 11% and adjusted EBIT climb roughly 30% to approximately €30 million. For the first three quarters of the year, revenue was up 10.3% to €1,540.0 million and EBIT rose about 40% to almost €93 million.
“The strong results for the third quarter show that we are operating on an increasingly profitable basis as we forge ahead with the implementation of our Dual+ strategy,” said Dr. Sebastian C. Schulte, Deutz CEO. “This has enabled us to raise our full-year guidance for the adjusted EBIT margin from around 5% to an anticipated range of between 5.3% and 5.8%.”
Schulte noted that the improved performance of the Classic business (+8.8% increase in adjusted EBIT margin) has enabled expansion of the company’s service business and the establishment of its green product portfolio while continuing to maintain profitable growth. The revenue of the service business grew by 7.2% to €360.5 million in the first three quarters of this year, and accounted for around 23% of consolidated revenue, making it the company’s second-largest area of business in terms of revenue.
According to Deutz CFO Timo Krutoff, new orders held steady in the third quarter, despite weakness over the first nine months of the year. “Pre-order effects in 2022 led to a year-on-year fall in new orders over the first three quarters of 2023 (-5.5%), but given the healthy level of orders on hand (€666.5 million as of September 30, 2023), we are nevertheless optimistic about the final quarter of the year and are confirming our revenue guidance of around €2.1 billion.”
That optimism stems, in part, to the Dual+ strategy. Announced in early 2023, it encompasses a new zero-emission product ecosystem alongside Deutz’s core business in optimized internal combustion engines. Both segments are supported through the global expansion of the company’s high-margin service business.
The strategy is already delivering tangible success, the company said, with the latest example in its Green segment. The company announced its first volume production order for 100 hydrogen gen-sets from China. The gen-sets will initially be powered by gray hydrogen, with the ability to switch to climate-neutral green hydrogen at a later point. Volume production of Deutz hydrogen engines for stationary applications is scheduled to begin at the company’s Cologne-Porz site at the end of 2024.
The company is also continuing to systematically implement organizational changes in the Green segment, primarily aimed at grouping the development and sales activities relating to alternative drives. The strategic realignment also affects the investment in Deutz subsidiary Torqeedo, which focuses on electric boat drives. Deutz is currently in advanced sales negotiations with a number of prospective buyers; the transaction is expected to be completed next year.
The company said it has made progress with the global expansion of its service and parts business, as well. It recently completed the acquisition of the Scandinavian Diesel Motor Nordic Group, which will facilitate the transition from traditional engine manufacturer to a provider of on-highway and off-highway solutions, Deutz said.
The company has refined its full-year guidance for 2023 based on its business performance in the first three quarters and on the basis of its existing planning for unit sales and production. After announcing in April that unit sales would reach the upper end of the target range of 175,000 to 195,000 engines, Deutz now anticipates unit sales of around 185,000 to 190,000 engines. This is still expected to result in an increase in consolidated revenue to around €2.1 billion.