German engine manufacturer Deutz not to meet fully year earnings

German engine manufacturer Deutz Group warned that a third quarter dip in sales revenue and warranty issues concerning its Compact Engines segment meant the company will not meet its previous forecast for the financial year 2014. A statement from the Cologne-based company said “significant costs will be incurred over the coming years in connection with warranties and goodwill for engines from the DEUTZ Compact Engines segment, primarily relating to engines manufactured in 2011”. In the third quarter o
October 21, 2014 Read time: 2 mins
German engine manufacturer 201 Deutz Group warned that a third quarter dip in sales revenue and warranty issues concerning its Compact Engines segment meant the company will not meet its previous forecast for the financial year 2014.

A statement from the Cologne-based company said “significant costs will be incurred over the coming years in connection with warranties and goodwill for engines from the DEUTZ Compact Engines segment, primarily relating to engines manufactured in 2011”.

In the third quarter of 2014, there was an unexpected charge against earnings of €20.4 million warranty costs, net of limited insurance claims. “We are currently examining whether we have any further insurance claims,” the company said.

New orders in the third quarter of 2014 stood at €330 million, down from €360.1 million for the same period last year. But revenue amounted to €424.6 million, up from €381 million in Q3 last year, for a year-on-year increase of 11.4%)

Operating profit (earnings before interest and taxes, EBIT) was €23.1 million (Q3 2013: €17.1 million, for a year-on-year increase of 35.1%). The EBIT margin was 5.4 per cent (Q3 2013: 4.5%). After taking the recognition of provisions into account, there was an operating profit of €2.7 million and the EBIT margin was 0.6%.

In the DEUTZ Compact Engines segment, new orders in the third quarter of 2014 totalled €270.4 million (Q3 2013: €303.1 million) and revenue stood at €368.3 million (Q3 2013: €315.1 million). The EBIT margin, excluding the unexpected charges exclusively for this segment, was 5.3% (Q3 2013: 2.3%).

After taking the recognition of provisions into account, the EBIT margin came to -0.2%.

New orders for the third quarter of 2014 fell below expectations because of the general economic slowdown. “Against this background, we expect to generate revenue of around €1.5 billion in the current financial year. This represents an increase of around 3% compared with 2013.”

Deutz will issue a new earnings outlook and more detailed disclosures regarding the third quarter of 2014 when the full quarterly report is published on 6 November.
Engines, Components & Tyres

For more information on companies in this article

Related Content

  • The cycle of potholes in the UK
    May 9, 2019
    Since 2015 almost a million potholes have been recorded annually by UK local authorities, with the 2016 count reaching 1,088,965, according to an insurance provider. The Insurance Emporium obtained data from 175 local authorities and compared it to the incidence of injury and damage claims made against these authorities by cyclists. During 2017-18, there were 335 pothole damage and injury claims filed against local authorities. Personal and dental injuries to cyclists accounted for 16% of these and d
    Read More
  • IRF Washington advocates for PPPs in traffic enforcement to boost safety
    November 10, 2015
    New IRF Policy Paper outlines effective automated traffic enforcement PPP models. In most countries traffic enforcement cameras and other equipment are purchased, owned, and operated by government organisations. The past two decades have seen a wide-ranging wave of privatisations and introduction of public private partnerships (PPP) in formerly government-owned or controlled activities, including traffic enforcement. Implementing this concept requires a set of principles and good practices presented in
    Read More
  • Brazil looks to stage major road construction event
    February 21, 2013
    The upcoming Brazil Road Expo event is capitalising on the country’s strong growth in highway construction. Brazil’s construction machinery market foresees an average growth of 12.5% in 2013, according to a survey of equipment manufacturers and importers released at the end of 2012. The third edition of Brazil Road Expo, the main paving technology and road infrastructure event in the country, is being held from March 19th-21st at the Transamerica Expo Center, in São Paulo. The event will gather some of the
    Read More
  • Lowering construction machine exhaust emissions
    November 6, 2017
    The alternatives to diesel fuel as a power source continue to grow as firms move to cut emissions - Mike Woof writes. Only the most myopic could have failed to notice that times are changing in terms of engine technology. In the on-highway automotive sector as well as for the off-highway construction machine segment, manufacturers are looking to lower tailpipe emissions. Similar technologies have been employed in both on-highway and off-highway sectors, although those solutions have been adapted to better
    Read More

Highlighted Content