DEUTZ (DEZ) Q2 2024 earnings summary

Executive summary

• Revenue for H1 2024 declined 12.6% year-over-year to €875.5 million, with new orders down 18.1% and unit sales down 18.9%, mainly due to weak demand in construction and agriculture, especially in Europe and China.

• Service business grew 6.5% and now represents 29% of total revenue, providing stability and resilience.

• EBIT margin before exceptional items was 5.7%, within guidance, supported by cost-cutting, service expansion, and pricing initiatives.

• Net income from continuing operations fell to €25.6 million, down from €53.8 million in H1 2023; EPS at €0.20 versus €0.44.

• Strategic acquisitions and partnerships, including Blue Star Power Systems, Rolls-Royce Power Systems, and TAFE Motors, were completed to strengthen growth and resilience.

Financial highlights

• New orders: €791 million, down 18.1% year-over-year; unit sales dropped 18.9% to 74,162 engines.

• Revenue: €875.5 million, down 12.6% year-over-year.

• Adjusted EBIT margin: 5.7%; gross margin improved to 23.8% from 22.1%.

• Free cash flow before M&A: -€35.1 million, impacted by working capital build-up.

• Equity ratio remains strong at 49.8%.

Outlook and guidance

• Full-year 2024 guidance confirmed: revenue €1.9–2.1 billion, adjusted EBIT margin 5.0–6.5%, free cash flow mid-double-digit million euros.

• Unit sales expected at up to 160,000 engines, lower end of previous range.

• Acquisitions will positively impact revenue and profit from Q3 onwards, with full effect in 2025.

• Medium-term (2025) targets: revenue above €2.5 billion, service revenue ~€600 million, adjusted EBIT margin 6.0–7.0%.