Deutz saw operating profits rise by €8.2m ($8.92m) during the first quarter of 2015, a more-than five-fold increase compared to the same period of the previous year.
This represents a 3.2% EBIT margin (before one-off items), and has been taken as an indication that the engine manufacturer’s efforts to boost profitability are proving successful.
The positive news comes despite a decline in unit sales, which Deutz attributes to the advanced production of engines.
“Despite the reduction in revenue, there was a significant increase in operating profit (EBIT before one-off items), which climbed from €1.9m ($2.07m) to €10.1m ($10.98m),” said the company.
“This represents an EBIT margin (before one-off items) of 3.2% a clear indication that the action taken to provide a further boost to profitability is working. Besides making structural improvements, Deutz has seen a market benefit from the movements in the USD-to-EUR exchange rate,” it explained.
New orders received by Deutz Group totalled €321m ($349m), 22.5% below the high level reported for the first three months of 2014 [of €414.2m] ($450m). Unit sales fell by 17%, from 44,457 engines to 36,907 engines.
Commenting on the decline, the Germany-headquartered firm said: “Much of this decrease is due to the strong sale of engines in the prior-year period ahead of the latest EU exhaust emissions standard. Revenue amounted to €318.1m ($346m), down by 7.2% on the figure of €342.7m ($373m) reported a year earlier.”
Deutz added that these figures are in line with its expectations for the beginning of 2015. The company expects 2015 to be “a year of transition”, dominated by lower demand precipitated by last year’s advanced production of engines.
Consequently, it is forecasting that revenue will decline by around 10% in 2015, compared to last year’s figures. Conversely, Deutz expects its EBIG margin (before one-off items) to improve slightly to roughly 3%.
