Deutz AG: Successful strategy despite challenges in the engine market!

Deutz AG: Successful strategy despite challenges in the engine market!

In recent weeks, Deutz AG from Cologne has presented its business figures with consistently positive statements, which have been well received on the stock market. CEO Sebastian C. Schulte was enthusiastic about the development and spoke of a “clearly positive result”. The growth rates in order intake and sales were definitely positive, although the traditional engine business has weaknesses in this regard. 35,517 engines were sold in the second quarter, which is similar to the same quarter last year. In the first half of the year, sales totaled 66,147 engines, ten percent below the previous year's figure.

However, increasing sales were recorded in the engine segment, primarily through the sale of larger and more expensive engines. The service business is also flourishing and showing strong growth. Overall, Deutz's total sales rose by 15 percent to around one billion euros in the first half of the year. Nevertheless, the operating result (EBIT) fell to 18.3 million euros compared to 39.2 million euros in the previous year, while the consolidated result even fell to 7.8 million euros (previous year: 25.6 million euros) - a dampening that can be attributed in particular to a savings program.

Strategic realignment

To meet the challenges, Deutz launched the “Dual+” strategy, which includes an extensive cost-cutting program to cushion the decline in demand. The central aspects of this strategy are the diversification of the product portfolio and the adaptation to the increasing demand in the area of ​​alternative drive technologies. This includes a realignment towards sustainable product offerings, the establishment of a new “Solutions” segment for alternative drives and a focus on electric drives and hydrogen engines. The “New Technologies” area is expected to grow to over 300 million euros and aims to strengthen corporate management in the sector of sustainable energy solutions.

Thanks to the acquisitions of Blue Star Power Systems and HJS Emission Technology, Deutz is well positioned to benefit from battery-electric drives in the off-highway sector. The company is targeting a sales volume of more than 500 million euros in the “Energy” segment by 2030 and aims to increase total sales to around 4.0 billion euros by 2030. The service area will account for a significant share of around 25 percent of sales.

Staff cuts and savings

The savings will be made possible by cutting jobs in research and development as well as in administration by 300 employees, mainly in Cologne. Savings of over 25 million euros have already been achieved this year, five million more than originally planned. In addition, the cost reduction program includes short-term measures that are expected to result in savings of 10 to 15 million euros in the fourth quarter.

Despite all this, the forecasts for the company look optimistic. Deutz expects business to pick up again in the second half of the year. The integration of Daimler truck engines, as well as takeovers that have already been initiated, further strengthen the company.

Deutz now employs 3,528 people in Germany (previous year: 3,310), including 2,642 in Cologne. The number of full-time employees worldwide has increased to 5,571 (previous year: 5,043), which shows that the company is also developing well across departments and locations. It remains to be seen how the measures and strategies will affect the overall picture of Deutz AG in the coming years. Market consolidation in the area of ​​classic combustion engines is in full swing and making production more flexible through outsourcing partners, such as the TAFE Group, will also play a major role.

In conclusion it can be said that Deutz AG, according to Review online, is determined to emerge from the current phase stronger and to master both the challenges of the industry and the increasing demands on sustainable technologies. National and international investors are looking forward to the company's developments.