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DEUTZ Group: Key Figure Overview
COLOGNE, GERMANY / ACCESSWIRE / August 11, 2020 / DEUTZ, one of the world’s leading brands of state-of-the-art education systems, recorded a significant overall decrease in sales functionality in the first part of 2020 due to the coronavirus crisis. Demand has fallen as consumers continue to sell the engine stocks they had accumulated before the advent of new emissions standards, which had already led to a low order point in progress until the end of 2019, and due to the macroeconomic effect on the coronavirus pandemic in what was already a challenging market environment. In addition, advertising operations were seriously disrupted this quarter due to production haltion and the advent of partial unemployment.
“The adverse effects of the coronavirus pandemic cannot be ignored on the global economy and, therefore, on our core business. Currently, no one can expect how the coronavirus crisis will continue to develop. However, it is transparent that the entire DEUTZ team will do it all. They can make sure we get more powerful out of the crisis. Despite the situation, we believe we are on track to achieve our medium-term goals,” said Dr. Frank Hiller, CEO of DEUTZ. Commenting on the Transform for Growth power program presented earlier this year, he added: “To be competitive in the long run and make sure the company stays on track to succeed, it is imperative that we review our processes and structures. and we expect the resulting implementation of the action plan to generate annual savings totaling around one hundred million euros from the end of 2022.”
Strong drop in numbers from coronavirus crisis
During the under review era, new orders obtained through DEUTZ decreased by 34.6% year-on-year to EUR 623.6 million. This was due not only to the sharp decline in new orders caused by the coronavirus crisis, but also to the highest point of new orders last year because consumers increased their engine stocks before new emission criteria came into force. sold those engines, putting even more stress on the company.
The application segments of structure, handling, agricultural machinery, and constant appliances recorded double-digit discounts on new orders. In contrast, the miscellaneous program segment and the business recorded additional increases of 16.4% and 0.8% respectively. The sharp increase in the miscellaneous programme segment was mainly due to the expansion of new orders for railway vehicle propulsion systems.
As of 30 June 2020, orders amounted to EUR 253.5 million (30 June 2019: EUR 462.6 million).
The DEUTZ Group sold a total of 73,859 engines in the era under review, 27.3% less than in the first part of 2019. The diverse were the only application segment with an increase in unit sales, recording a really large increase of 112.7%. largely due to the arrival of small outboard engines called trolling fishing engines. The commissioning of these engines has allowed DEUTZ’s subsidiary, Torqeedo, to more than double its ship engine sales to a total of 16,244, which equates to an accumulation of 163.8% year-on-year.
In the EMEA region (Europe, middle East and Africa), DEUTZ’s largest sales market, unit sales decreased by 30.5% from last year to 37,763 engines. In the Americas region, unit sales fell 47.4% to 14,726 engines. By contrast, unit sales in the Asia-Pacific region increased to 10.8% due to the aforementioned increase in Torqeedo.
DEUTZ Group revenues decreased by 33.3% as of the first six months of 2019 to EUR 620.0 million. Revenues declined at all levels, either regionally and in the application segment.
The operating source of income declined dramatically, in part due to declining economies of scale
The effect of the coronavirus pandemic on the activities of the DEUTZ Group and its consumers led DEUTZ to report an operational loss (EBIT before exceptional items) of EUR 49.9 million in the first component of 2020. This significant minimization compared to last year is due, in composticular, to minimize the source of income and the consequent de-economies of scale. The operational source of revenue also fished heavily on invoices of approximately 10 million euros made under follow-up agreements with suppliers in insolvency proceedings and demand-related impairments of approximately five million euros recorded in capitalized progression projects. However, there have been positive influences on the functionality of the effects in addition to general charge discounts and the use of component unemployment: the Executive Committee has given up its one-year variable remuneration by 2020 and senior managers have renounced a really important component of their variable remuneration by 2020. EBIT margin was minus 8.0% during the revised era, compared to 5.1% last year.
COMPACT DEUTZ Engines (DCE): key figures
In the first part of 2020, sales figures for the DCE segment declined overall compared to last year. New orders amounted to 439.9 million euros, 41.8% less than in the first half of 2019. The breakdown by application segment shows that only the business recorded an accumulation of new orders, with an increase of 6.0% to 89.0 million euros, mainly due to the expansion of visitor service activities on the site. Sales of segment units decreased by 41.2% to 48,173 engines and revenue fell 37.8% to 453.7 million euros, with declines in all regions and application segments.
In the first six months of this year, operating profit in the DEUTZ compact engine segment deteriorated by a wholly significant amount of 84.7 million euros due to a loss due to the collapse in the call caused by the coronavirus pandemic. The operational source of cash inflow into the segment was affected by a minimisation of cash inflow of almost 38%, invoices to suppliers subject to insolvency proceedings to enable them to continue to obtain DEUTZ and amortization in a progressing project. These depreciations were accounted for as a result of the expected minimization of the affected engine series.
CUSTOM DEUTZ Solutions (DCS): Key Figures
Sales figures for the DCS segment also deteriorated the era under review. New orders fell 8.4% year-on-year to 165.4 million euros. The diverse were the only segment of applications with an increase in new orders, recording a really significant increase of 52.6% to 29.6 million euros, largely due to new orders for propulsion systems for railway vehicles. Total unit sales in the segment fell 30.1% to 9,442 engines. Only the segment of structure equipment programs increased, with unit sales increasing by 13.7% to 1,755 engines thanks to the mining apparatus boosting business. Revenues decreased in all regions and application segments, 21.6% year-on-year to EUR 145.0 million.
The operational source of revenue in the segment deteriorated particularly compared to the first part of 2019. This is basically due to the sharp decline caused by the global coronavirus pandemic in the under review era. The segment’s operating revenue source was also reduced through depreciation on two progressing projects that were accounted for due to the expected decrease in call for the affected engine series.
Others: key figures
The Others segment includes not only Torqeedo’s business with electric motors for ships, but also Futavis GmbH, which was acquired in October 2019. Overall, the commercial functionality of the segment was positive in the under review era. Despite the coronavirus crisis, new orders grew by up to 4.8% year-on-year to reach 19.5 million euros. In the first part of 2020, unit sales more than doubled to a total of 16,244 electric motors. This is basically due to the rise of trolling fishing engines and has resulted in a 32.4% increase in turnover to EUR 22.5 million. All regions contributed to this growth.
During the under review era, the operational loss of the Other segment amounted to EUR 4.6 million. This is basically due to the weakening of the joint venture DEUTZ AGCO Motores SA, Haedo, Argentina, in the first component of 2019. As a component of the weakening, which was done for materiality reasons, the accumulated negative exchange rate Spreads were reclassified from equity to the source of income status, which had a significant adverse effect on the effects of the sector during the era last year.
Forecasts for 2020 continue to be revised
The progression and timing of the long-term coronavirus crisis is very difficult to predict, as it will have an effect on the economy and, therefore, on DEUTZ driving activities. As a result, it is not yet imaginable to supply an updated address by 2020 at this time.
Basically, it can be assumed that the remainder of 2020, especially the third trimester, will continue to be greatly affected by the effect of the coronavirus crisis, albeit to a lesser extent than the quarter of the moment.
The final tranche of the acquired value of the Cologne-Deutz site, which was expected to be an exceptional positive, is now expected to be paid in 2021 instead of this year. However, it is vital to note that the amount and date of this payment continue to count when the site progression plan is officially approved and therefore we cannot yet make a decision accurately.
Medium-term confirmed goals
Despite the delicate situation, the Company reaffirms its existing outlook for 2022, where it expects to generate revenues of more than 2 billion euros and an EBIT margin before exceptional pieces in diversity from 7% to 8%.
Growth is most likely due mainly to continued internationalization and immediate business expansion, but also to the expansion of the core business and the continued progression of the product portfolio. As a result, DEUTZ is also committed to its business profit target, which has postponed until 2021 and expects profits of more than 400 million euros.
In view of the restructuring of its business in China, DEUTZ raised its initial profit target for 2022 from about 500 million euros to about 800 million euros. This significant increase is partly due to the fact that the planned volume for the joint venture already meets existing market requirements and that the objective is to gain more competitive market share by implementing the Chinese strategy.
Defining the Global Efficiency Program Transform for Growth
Earlier this year, DEUTZ introduced an enterprise-wide power program, Transform for Growth, to further consolidate its effects in challenging conditions. Details of the lie action plan were developed at the time of the quarter. The large spaces of action are the optimization of the global production network, the automation and digitization of production and management processes, and the rationalization of the organizational structure at the group level.
By taking these measures, DEUTZ expects to generate annual savings of around one hundred million euros, the total effect of which is expected to be achieved from 2022. In addition to adjusting operating costs, much of the savings will need to be achieved through reduced staffing. Costs. This will be a relief in the workforce of up to 1,000 more people throughout the Group, which will be implemented with the minimum social impact imaginable.
A total of 380 jobs have already been cut in the first component this year, thanks as a component to relief in the number of transition workers. In the process, DEUTZ plans to launch a voluntary program that encompasses 350 more jobs at its sites in Germany. The remainder of the reduction will be achieved until the end of 2022 with the completion of fixed-term contracts and through herbal wear.
“Our number one goal is to achieve mandatory layoffs and find a socially guilty solution for our employees. We have already engaged in an ongoing discussion with staff representatives to discuss the main points of a voluntary program,” said Hiller, CEO of DEUTZ.
Forward-looking statements
This news for investors would possibly involve forward-looking statements based on existing assumptions and forecasts made through DEUTZ’s control team. Several known and unknown risks, insecurities and other points would possibly cause significant differences between actual results, monetary position or functionality of the DEUTZ Group and the estimates and evidence presented here. These points come with those described through DEUTZ in published reports, available in www.deutz.com. The Company does not undertake to update or modify such forward-looking statements to reflect long-term events or events.
About DEUTZ AGDEUTZ AG, a publicly traded company based in Cologne, Germany, is one of the world’s leading brands of state-of-the-art drive systems. His main skills are the development, production, distribution and maintenance of diesel, gas and electric propulsion systems for professional applications. It provides a wide variety of engines that offer up to 620 kW used in structure equipment, agricultural machinery, handling equipment, desktops, advertising cars, railway cars and other applications. DEUTZ has approximately 4,900 international workers and more than 800 business and service partners in more than 130 countries. It generated sales of 1840.8 million euros in 2019.
More information can be found at www.deutz.com. [1] The profit target of approximately 800 million euros includes the profits generated through the joint venture with SANY. Depending on the equivalence method, this turnover is not posted to the consolidated accounts.
Contact: Leslie Isabelle Iltgen Communications and Investor RelationsVice SeniorTel President. ’49 (0) 221822-36 00 Fax: ’49 (0) 221822-15 36 00 Email: [email protected]
SOURCE: DEUTZ AG
See accesswire.com edition: https://www.accesswire.com/601129/DEUTZ-AG-Significant-Decline-in-Business-Performance-in-The-First-Half-of-2020-Due-to – The Coronavirus Crisis
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