Deutz hit by emissions rules

A 31% fall in unit sales at engine manufacturer Deutz has been recorded for the first nine months of 2015.

New orders amounted to €932.9 million in the first nine months, down by 13.4% on the figure of €1.08 billion reported a year earlier.

In the third quarter of 2015, new orders came to €262.2 million – 20.5% down year-on-year and 25% less than in the previous quarter.

Unit sales fell by 30.9%, from 155,099 engines in the same period a year earlier to 107,236 engines in the first nine months of this year. Third-quarter unit sales totalled 29,116 engines, which was 48% below the figure for the third quarter of 2014 when 56,020 engines were sold. It was also 29.4% fewer than in the second quarter of 2015, when the total was 41,213 engines.

Revenue for the nine-month period was €938.8 million, a decrease of 20.3% compared with the figure of €1.18 billion for the corresponding period of 2014. Deutz said this decline in revenue was a result partly of the changes to emissions standards for engines under 130kW that came into force in the European Union on 1 October, 2014, and the resulting effects from the advance production of engines.

It added that the current reluctance of end customers to invest was subduing business across all regions, which meant that the inventories of a number of its European customers were being used up more slowly.

In the third quarter of 2015, revenue stood at €268.6 million, which was a 36.7% reduction on the third quarter of 2014, and a 23.7% decrease on the second quarter of 2015.

Dr Margarete Haase, chief financial officer, said, “Our current expectation is that this market weakness will continue throughout the fourth quarter of 2015, and feature strongly well into the first quarter of 2016.”

She said the company was responding by putting a stop on spending and by extending short-time working, particularly at its Cologne, Germany, factory.

“The programme to optimise the network of sites in Germany, which we began last year, is being implemented on schedule and will continue to proceed as planned. This will substantially increase efficiency.”

Chairman Dr Helmut Leube, said, “We are well positioned with our products and processes. As soon as the market starts to recover, Deutz will be able to reap the rewards.”

The forecast for the current year was adjusted on 15 September, because of the low level of new orders and the small volume of business. Deutz now expects revenue to decline by around 20% year-on-year.