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 €489.0 million, driven by strong service business and M&A, while organic growth was slightly negative.

• New orders surged 30.3% year-over-year to €546.1 million, supported 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.

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

• Net income fell to a loss of €10.0 million, mainly due to €25.0 million in restructuring provisions for the Future Fit cost program.

• The Dual Plus Strategy, cost reduction initiatives, and new energy business unit are progressing well, with portfolio expansion including the UMS acquisition and divestment of Torqeedo.

Financial highlights

• Adjusted EBIT margin was 4.3%, down 1.8 percentage points year-over-year due to lower scale effects and restructuring, partially offset by acquisitions and cost discipline.

• Service business grew 11.9% year-over-year, with Daimler Truck off-highway engines now fully consolidated.

• Working capital ratio improved to 20.3%, and net debt decreased to €210.2 million.

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

• Gross margin slipped to 23.4% from 24.1% year-over-year.

Outlook and guidance

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

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

• Economic recovery anticipated in H2 2025, supporting confidence in meeting guidance midpoint.

• Cost-cutting program aims to reduce costs by €50 million by end-2026, with sustainable savings of at least €20 million from Future Fit.

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