Release Date: March 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Deutz AG (DEUZF, Financial) reported a 4.5% year-over-year increase in new orders, reaching EUR1.827 billion.
- The service business surpassed EUR500 million in revenue for the first time, indicating strong growth in this segment.
- The acquisition of Blue Star Power Systems contributed significantly to revenue, with expectations of continued growth in the energy business.
- The company successfully completed the takeover of the Daimler Truck business, expanding its engine portfolio and customer base.
- Deutz AG (DEUZF) launched a Future Fit program targeting sustainable savings of EUR50 million from 2026 onwards, aiming to improve long-term competitiveness and profitability.
Negative Points
- Revenue decreased by 12% to EUR1.814 billion, primarily due to a significant decline in sales in Europe, particularly in the construction and agricultural sectors.
- EBITDA decreased by 2.8% year-over-year, reflecting challenges in maintaining profitability amidst a difficult economic environment.
- Free cash flow before M&A was down 58.8% year-over-year, indicating cash flow challenges.
- The company faced a decline in unit sales by 23.6%, with almost 143,000 units sold, highlighting a challenging market environment.
- Net income decreased to EUR41.8 million from EUR82 million the previous year, impacting earnings per share.
Q & A Highlights
Q: Can you confirm the expected revenue from the Rolls-Royce acquisition service business for 2025?
A: Yes, the service business from the Rolls-Royce acquisition was around EUR5 million in 2024, and we expect it to be around EUR30 million for 2025 due to a longer consolidation period. The parts were transferred later, which delayed the revenue impact. - Sebastian Schulte, CEO
Q: Is the expected market recovery in the second half of 2025 included in your current outlook?
A: Yes, our forecast is based on a bottom-up approach, considering customer feedback and market data. However, the effects of government programs like the German package are not yet fully reflected due to the time it takes for such initiatives to impact the market. - Sebastian Schulte, CEO
Q: How significant could the impact of the German government program be on your revenue?
A: If the program kicks in, it could have a significant effect. Historically, when such programs start, they can lead to a rapid increase in demand, but we prefer to provide guidance based on solid information rather than speculation. - Sebastian Schulte, CEO
Q: What are your expectations for the Solutions segment, particularly regarding Blue Star's contribution?
A: Blue Star contributed around EUR60-65 million in 2024, and we expect solid growth in 2025. The upper end of our forecast does not include potential acquisitions but reflects the potential of the energy business. - Sebastian Schulte, CEO
Q: Can you elaborate on your expansion plans in the defense sector and any potential acquisitions like TKMS?
A: We won't comment on acquisition rumors, but defense is an important market for us. We have a project team exploring opportunities in engines and power packs for military vehicles. We expect mid-double-digit million euro revenue potential this year, with significant growth in the future. - Sebastian Schulte, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
