Deutz has completed a strong third quarter with revenue increasing 19 percent compared to the third quarter of 2021, reporting almost €1.4 billion in revenue for the quarter. Orders on hand rose to around €830 million. Adjusted EBIT margin improved to 4.7 percent.
Following a successful first half of the year, Deutz continued to generate growth and recorded double-digit increases in unit sales and revenue in the nine-month period. The war in Ukraine did not have a material adverse effect on business performance. However, as for other companies, the impact of the war on energy and raw material prices and on the global flow of goods around the world is very tangible for Deutz.
“Exceptionally high price increases across the board, combined with disruptions to supply chains, are taking their toll on the economy as a whole,” said CEO Dr. Sebastian Schulte. “Nonetheless, we raised our adjusted EBIT margin by 2.1 percentage points to 4.7 percent. This is proof positive that the performance initiatives that we have launched and our greater focus on maintaining cost discipline are increasingly paying off. This uptrend is encouraging but offers no room for complacency because we still have a long way to go before we achieve our targeted profitability level.”
Deutz defined a range of measures under its Powering Progress strategy program that are aimed at facilitating the company’s transition to alternative drive systems and new business models and boosting its commercial performance. They include passing on higher costs to customers in the short term through multiple rounds of price rises. This will increasingly mitigate the impact of these higher costs.
Looking to the future, Schulte added: “Our orders on hand stood at the very high level of approximately €830 million at the end of September. That provides a stable starting position for the coming months. Market demand remains particularly strong for engines with a capacity of less than four liters. At the same time, our book-to-bill ratio of 0.95 in the third quarter indicates that market growth is gradually slowing down. However, we have set a course that will make Deutz more resilient in periods of economic weakness.”
Deutz progresses with hydrogen strategy
As well as delivering a positive operating performance and successfully launching its first performance initiatives, Deutz made further progress with implementing its hydrogen strategy and joined the HyCET (Hydrogen Combustion Engine Trucks) research project consortium. HyCET aims to demonstrate the sustainability potential of trucks with hydrogen combustion engines in transportation logistics. As part of the project, two 18-tonne trucks will be developed and fitted with Deutz TCG 7.8 H2 hydrogen engines. The trucks will then be put through their paces by using them in the regular logistics operations of the BMW Group and Deutz. The four-year research project has a total investment volume of €19.5 million, of which €11.3 million will be funded by the German Federal Ministry for Digital and Transport.
