Deutz operating income halves

Despite reporting record new orders for the first six months of the year, engine manufacturer Deutz reported a 2.8% year-on-year drop in revenue to €662.1 million while operating profit halved to €10.1 million.

The number of engines sold in the first half fell 8.5% compared to last year to 85,907 units. Deutz said business volumes had contracted, and it had also accounted for the cost of a number of product launches over the previous 12 months.

Nevertheless, new orders received during the first half increased by over 20% compared to last year to €843.5 million. Deutz said demand was particularly strong for its new TCD 2.9 and TCD 3.6 engines, which comply with EU Stage IIIB/EPA Tier 4 Interim emissions regulations.

Meanwhile, the company said its Chinese joint venture Deutz (Dalian) Engine Co was able to buck market trends and achieve robust growth this year. Having incurred a loss last year, Deutz said it reported a modest operating profit for the first half of 2013 thanks to higher revenues and improved efficiency.

Deutz chairman Dr Helmut Leube said, “We expect to generate encouraging growth in our unit sales, revenue and earnings over the remaining course of the year. Revenue is projected to reach at least €1.4 billion and there is the possibility of even higher revenue in view of the generally strong performance. There are, however, still risks in Europe and China.

“Our operating margin is predicted to exceed 3%. We have laid the foundations for further revenue rises in subsequent years thanks to the growth projects that we have already initiated, and the increasing proportion of total unit sales generated by higher-value engines that meet the new emissions standards,” he added.