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  5. Deutz AG Business Report FY ended Dec. 2014

Deutz AG Business Report FY ended Dec. 2014

Financial Overview

(in million EUR)
FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 Rate of change
(%)		 Factors
Sales 1,530.2 1,453.2 5.3 1)
EBITDA 120.3 142.0 (15.3) -
Automotive
Sales 82.0 188.5 (56.5) 2)


Factor
1) Overall
-For FY ended Dec. 2014, the Company's sales increased by 5.3% year-on-year. Customers ordered more engines than they needed in anticipation of the change to the emissions standard for engines under 130kW in the EU that came into effect on 1 October 2014.

2) Automotive
-Sales for Automotive for FY ended Dec. 2014 decreased by 56.5% year-on-year, because the Company has not introduced compliant engines for the Euro 6 emissions standard started from beginning 2014. Also, as the joint venture in China, Dalian, is only consolidated under the equity method due to the introduction of new methods of accounting, its revenue has not been included in the Company's consolidated revenue.

Restructuring in Germany

-The Company will consolidate the facility in Cologne-Deutz into the facility in Cologne-Porz by 2016, and build a new shaft center for the production of camshafts and crankshafts.
-The Company will close the exchange engine plant in Uebersee (Lake Chiemsee) and integrate it into the plant in Ulm.

Recent Development Outside Germany

<China>
-The Company has announced that it has agreed with its partner AB Volvo not to proceed with their proposed Deutz Engine (China) Co., Ltd. (DEC) joint venture. They have now agreed that this production company should be wound up given the weak prevailing market situation in China. The joint venture has not yet made any substantial investments. It remains the Company's stated objective to use Chinese production facilities in order to meet local demand from AB Volvo and other target customers and, to this end, the Company will be focusing on its Deutz Dalian Engine Co., Ltd. (DDE) joint venture. Since 2007, the Company and the First Automotive Works (FAW) Group have been running the Deutz (Dalian) Engine Co., Ltd. joint venture in Dalian, China, where three to eight-liter diesel engines are manufactured - primarily for the Chinese market. (From a press release on February 10, 2015)

-Sales from the Joint Venture Deutz Dalian Engine (DDE) for FY ended Dec. 2014 was EUR 359.8 million up 12.8% year-on-year.

-In June 2014, the Company announced that it'll open a new sales office in Shanghai. The new office will employ sales staff as well as application engineers and service engineers. It will be the second sales office in China following the first one established in 2010 in Beijing. The Company will strengthen its local market presence in central and southern China.

R&D Expenditure

(in million EUR)
FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Overall 53.1 52.6 62.1
-Compact Engines 48.1 48.8 55.3
-Customized Solutions 5.0 3.8 6.8

*After deducting grants received from major customers and development partners.

R&D Activities

Development of New engines
-The Company develops compact engines, featuring low lifecycle costs and exhaust aftertreatment designs tailored to customer needs.

  • In 2014, the Company gave production approval to all of engines that are designed to meet the latest EU Stage IV/US Tier 4 emissions standard. The Engines in the 2.9 to 7.8 litre cubic capacity range that are equipped with diesel particulate filters (DPFs) already meet the next European emissions standard, EU Stage V, which is expected in 2019. As the engines are compliant to next generation of emission standard, so that the car makers don't have to invest in adapting their equipment to upcoming emission change.
  • In 2015, the production launch of the TCD 3.6 High Torque with an output of less than 56kW (EU Stage IV/US Tier 4) is planned.

 

Capital Expenditure

(in million EUR)
FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Overall 66.6 76.3 110.6
-Compact Engine 57.8 69.2 95.0
-Customized Solutions 8.8 7.1 15.6

 

Data

  Dec. 2014 Dec. 2013 Dec. 2012
Group overall 3,916 3,952 3,991
-Germany 3,093 3,095 3,189
-Outside Germany 823 857 802

 

Sales by Segment

 (in million EUR)
  FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Compact Engines 1,279.9 1,188.8 1,005.0
Customized Solutions 250.3 264.4 286.9
Total Sales 1,530.2 1,453.2 1,291.9

 

Revenue by Geographic Area

 (in million EUR)
  FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Europe/Middle East/Africa 1,166.2 1,155.4 984.2
Asia - Pacific 107.4 107.2 116.8
Americas 256.6 190.6 190.9
Total 1,530.2 1,453.2 1,291.9

 

Sales by Application

 (in million EUR)
  FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Mobile Machinery 715.3 481.6 477.5
Agricultural Machinery 257.5 325.6 152.5
Automotive 82.0 188.5 192.1
Stationary Equipment 179.2 173.7 204.2
Service 259.3 253.7 250.3
Other 36.9 30.1 15.3
Total 1,530.2 1,453.2 1,291.9

>>>Financial Data


-Sales ratio for Automotive fluctuates between 5 - 15% of overall sales (Between FY ended Dec. 2012 and FY ended Dec. 2014).
Mobile Machinery and Agricultural Machinery are 2 major applications.

-Sales ratio for Automotive for FY ended Dec. 2014 decreased by 8 percentage points year-on-year, because the Company has not introduced compliant engines for the Euro 6 emissions standard. Also, as the joint venture in China is only consolidated under the equity method due to the introduction of new methods of accounting, its revenue has not been included in the Company's consolidated revenue.