DEUTZ (DEZ) Q1 2025 earnings summary

Executive summary

• Q1 2025 saw robust performance amid ongoing market challenges, with revenue up 7.5% year-over-year to nearly €490 million, driven by strong service business and M&A, while organic growth was slightly negative.

• New orders rose 30.3% year-over-year to €546.1 million, mainly driven by acquisitions such as Blue Star Power Systems and the Daimler Truck business, with a book-to-bill ratio of 1.1 and order backlog at €521.0 million.

• Adjusted EBIT margin was 4.3%, down 1.8 percentage points year-over-year, impacted by lower scale in engine production but partially offset by acquisitions, service growth, and cost discipline.

• Net income fell to a loss of €10.0 million, impacted by €25 million in Future Fit restructuring provisions.

• Free cash flow was strong at €23.4 million, up €18.3 million year-over-year, reflecting healthy cash conversion and improved working capital.

Financial highlights

• Revenue: €489.0 million (+7.5% y-o-y); new orders: €546.1 million (+30.3% y-o-y), driven by M&A, especially Blue Star Power Systems.

• Adjusted EBIT: €21.0 million (4.3% margin), down from €27.7 million (6.1%) in Q1 2024, mainly due to lower fixed cost absorption.

• Net income: €-10.0 million, impacted by €25 million provision for the Future Fit cost program.

• Free cash flow: €23.4 million (+€18.3 million y-o-y), supported by strong operating cash flow and working capital management.

• Equity ratio at 47.4%, leverage stable at 1.3x EBITDA.

Outlook and guidance

• 2025 guidance confirmed: revenue €2.1–2.3 billion, adjusted EBIT margin 5.0–6.0%, mid-double-digit million-euro free cash flow.

• Engine and services segment expected at 6–7% EBIT margin; solutions segment at -10% to break even.

• Medium-term (2028) targets: €3.2–3.4 billion revenue, 8–9% EBIT margin.

• Improvement anticipated in the second half of 2025, driven by cost reductions, energy segment growth, and initial contributions from new tech.

• Economic recovery expected to influence Q4, supporting confidence in meeting guidance midpoint.