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11 August 2016

DEUTZ year-end expectations hold firm despite volatile market

German engine manufacturer DEUTZ reported new orders in the group rose by 1% to €677.2 million (H1 2015: €670.7 million), despite tough market conditions.

Orders in the second quarter of 2016 amounted to €349.9 million, which was 6.9 per cent higher than the figure of €327.3 million for the first quarter, and the same level as the second quarter of 2015 (€349.7 million).

The number of engines sold fell to 69,705, down by almost 11% compared with the

corresponding period of 2015 (H1 2015: 78,120 engines). The sales of 37,594 engines in the second quarter of 2016 represented a just over 17% increase on the first quarter of 2016 (32,112 engines), but an 8.8% drop on the prior-year quarter (Q2 2015: 41,213 engines).

Revenue amounted to €644.4 million in the six-month period and was almost 4% lower than the figure of €670.2 million reported for the corresponding prior-year period. Broken down by region, revenue was up by 1% in the EMEA (Europe, Middle East and Africa) region and by 10.3% in the Asia-Pacific region, but down by 22.4% in the Americas.

In the second quarter of 2016, revenue was down by 2.2% year on year, falling to €344.2 million (Q1 2015: €352.1 million), although it was almost 15% higher than in the first quarter of 2016 (€300.2 million).

Despite the fall in revenue, the figure of €20.7 million for operating profit (EBIT) was slightly higher than in the comparable prior-year period (H1 2015: € 20.3 million) because of cost-cutting measures and lower depreciation and amortisation. As a result, the EBIT margin went up to 3.2%.

Net income for the first six months of 2016 amounted to €20.0 million (H1 2015: €16.7 million). “This means that the first half of 2016 proceeded as we had expected, so we are well on the way to achieving our forecast for the year as a whole," said Helmut Leube, chairman of DEUTZ.

A company statement said that the programme to optimise its network of sites in Germany is progressing according to plan. The new shaft centre in Cologne-Porz, its biggest site, has come on stream and will gradually be ramped up in the coming months. "This means that our efficiency measures aimed at optimising our network of sites are right on schedule. We are very well positioned to generate a significantly higher EBIT margin again if unit sales increase," said DEUTZ's chief financial officer, Margarete Haase.

DEUTZ has confirmed its forecast for 2016 as a whole and, in a tough market environment, continues to expect revenue to stagnate or, at best, rise slightly and the EBIT margin to increase moderately. Due to seasonal factors, the second half of 2016 is expected to be weaker than the first six months.

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