Deutz is showing signs of recovery in the first quarter 2021. While the pandemic’s uncertainties persist, the trend is pointing to a dramatic 2020.
Deutz first quarter 2021 is pretty good
«There has been a notable increase in customers’ propensity to proceed with capital expenditure in all of the main application segments and this has enabled us to make a better start to the current year than originally anticipated. New orders are up by around a third compared with the first quarter of 2020. This growth, combined with a book-to-bill ratio of 1.35, gives us cause for optimism about the months ahead,» said CEO Frank Hiller. «At the same time, we have significantly improved our profitability. This is in no small part due to the effects of cost savings that we have already achieved thanks to the rigorous implementation of our efficiency program.» According to the company, “On the back of better than expected market demand, new orders received by DEUTZ in the first three months of this year jumped by 30.3 percent compared with the first quarter of 2020 to reach €464.8 million. All of the main application segments recorded double-digit percentage increases. Unit sales of DEUTZ engines rose from 31,546 to 32,249 engines. Including Torqeedo’s electric drives for boats, the Group sold a total of 38,384 engines and motors, compared with 40,069 in the first quarter of 2020. Consolidated revenue went up by 1.1 percent to €343.4 million due to a favorable product mix compared with that in the prior-year period. EBIT before exceptional items (operating profit) improved significantly to a profit of €0.8 million in the first three months of this year (Q1/2020: loss of €11.8 million), partly due to the increasingly noticeable effect of cost savings resulting from the restructuring that was initiated in 2020. Furthermore, the figure for the prior-year period had been squeezed by payments to suppliers going through insolvency proceedings.
The EBIT margin before exceptional items improved to 0.2 percent, compared with minus 3.5 percent in the first quarter of 2020. Having made a better start to the new year than expected, DEUTZ is raising its full-year guidance for 2021. Based on current information, the Company anticipates unit sales of 140,000 to 155,000 DEUTZ engines1 (previously: at least 130,000), resulting in an increase in revenue to between €1.5 billion and €1.6 billion (previously: at least €1.4 billion). In view of the continued successful expansion of the service business, we still anticipate that service revenue will increase to around €400 million. The Company had originally expected to at least break even in terms of EBIT margin before exceptional items in 2021 but now predicts that this margin will be in the range of 1.0 percent to 2.0 percent.
The critical point the supply of semiconductors
The above guidance has been issued on the basis of current business performance and the current supply situation. The ongoing coronavirus pandemic and problems with the global supply of semiconductors are continuing to create uncertainties, making it impossible to accurately predict the potential impact on business performance, for example as a result of supply shortages. Difficulties with the supply of some components are expected to continue until at least the third quarter.”