📋 Tender Overview
DEUTZ a leading global manufacturer of innovative drive systems registered a sharp overall decline in business performance in the first nine months of 2020 which was in line with its expectations. This was due not only to the macroeconomic effects of the coronavirus crisis which in an already challenging market environment made customers in various industries much less willing to invest and thus triggered a collapse in demand but also in particular to the fact that customers were continuing to run down the inventories of engines they had built up before new emissions standards came into force. Furthermore business operations were disrupted during the period under review as a result of a temporary production shutdown in April 2020 because of coronavirus.In contrast to the sharp decline in DEUTZs engine business in the first nine months of 2020 the sales figures for the third quarter of 2020 were higher overall than those for the second quarter of the year. As a result operating profit EBIT before exceptional items improved significantly compared with the previous quarter.With regard to the China strategy the joint venture with Chinas largest construction equipment manufacturer SANY notched up its first successes Not only is the joint venture already profitable but it is set to increase its production volume from around 7000 engines in 2019 to roughly 20000 engines for 2020 as a whole. At the end of the second quarter of 2020 DEUTZ increased its revenue target for China for 2022 from approximately 500 million to around 800 million on the grounds that market demand is already on a par with the production volume planned for the joint venture and in light of the expected gains in market share.Significant progress has also been made in the global expansion of the high-margin service business which is a key pillar of the overarching growth strategy. For example DEUTZ acquired the companies DEUTZ Austria GmbH Motorcenter Austria GmbH and Pro Motor Servis CZ s.r.o. at the beginning of the fourth quarter of 2020. These former subsidiaries of the Austrian company PRO MOTOR Beteiligungsgesellschaft mbH sell and service diesel engines in Austria the Czech Republic Hungary Slovakia and Slovenia and provide DEUTZ with direct access to the markets in these regions.Improvement in sales in Q3 2020 compared with the previous quarterIn the first three quarters of 2020 new orders received by DEUTZ fell by 29.0 percent year on year to 933.6 million. New orders were down significantly in all the main application segments not only because of the collapse in demand related to the coronavirus crisis but also due to the high level of new orders in the prior-year period as a result of customers building up their inventories of engines before new emissions standards came into force. Only the Miscellaneous segment recorded an increase in new orders by 5.4 percent to 91.0 million which was attributable to the exceptionally strong growth in orders for rail vehicle drive systems.The volume of orders for the third quarter of 2020 was up by a significant 16.1 percent on the previous quarter. All application segments contributed to this improvement with the exception of Stationary Equipment. As of September 30 2020 orders on hand stood at 250.4 million September 30 2019 375.2 million.The DEUTZ Group sold a total of 108559 engines in the reporting period which was 30.3 percent fewer than in the first three quarters of 2019. Among the application segments the only one with a significant increase in unit sales was Miscellaneous with a rise of 67.6 percent. This improvement was partly due to the ramp-up of trolling motors made by DEUTZ subsidiary Torqeedo whose unit sales nearly doubled year on year after selling a total of 24057 electric motors. The driving factors behind the drop in unit sales in the other application segments were generally weaker market demand and in particular adverse effects resulting from customers running down inventories of engines that had been purchased ahead of new emissions standards coming into force.DEUTZs unit sales were up by 2.7 percent compared with the second quarter of 2020 mainly due to double-digit percentage increases in the Material Handling and Agricultural Machinery application segments. In terms of regions this increase in unit sales was attributable to the Americas and the EMEA region.
