Deutz embarks on a mission to close the gap
Deutz Makes Strong Comeback, Pursues Growth in Defense and Heavy Equipment Sectors
German engine manufacturer Deutz has reported a strong comeback in the second quarter, with revenue growth across the entire group and a confirmed forecast for the full year.
According to CEO Sebastian Schulte, the transformation into a more diversified and resilient company is showing results. Deutz aims to permanently reduce its cost base by more than 50 million euros by the end of 2026, with more than half of the cost reduction expected to be achieved in the current financial year.
The company's growth has been driven by acquisitions and strong demand, with order intake and revenue growing at double-digit rates across the group. Deutz has announced plans to expand its defense sector activities, although specific future acquisition targets or precise areas for new acquisitions in the defense industry have not been publicly detailed.
Recent acquisitions, such as the purchase of Blue Star Power Systems last year, have played a significant role in the company's growth, generating double-digit revenue growth. The acquisition of BTH FAST, a Polish service and sales company active in markets including mining machinery, industrial applications, and railway systems, indicates expansion in heavy equipment sectors adjacent to defense.
The company's EBIT margin is expected to be between 5 and 6%. The classic business with engines and services is expected to achieve an EBIT margin of 6 to 7%, while the Solutions segment may just break even. The Solutions segment saw a significant increase in revenue due to acquisitions, totaling 83.7 million euros. However, EBIT in the Solutions segment was in the red at 10.2 million euros.
The interim report shows that revenue for the reporting quarter increased by almost 7% to 923 million euros, but EBIT for the quarter fell by 16% to 56.7 million euros. The loss in the Solutions segment was primarily due to New Technology. There were also one-off expenses of 25 million euros in the first quarter.
Deutz is creating conditions for further growth through the "Future Fit" cost program, which is being implemented to secure results. The company is not disclosing detailed plans or areas beyond general expansion intentions in the defense sector, but it is clear that they are actively growing in this market through acquisitions.
In summary, Deutz is making a strong comeback, with growth driven by acquisitions and strong demand. The company is aiming to reduce costs, expand in the defense sector, and increase its presence in industrial and heavy machinery market segments. While no specific acquisition targets have been announced, it is clear that Deutz is actively pursuing growth in these areas.
The German engine manufacturer, Deutz, is actively pursuing growth not only in the defense sector but also in the wider industrial and heavy equipment finance business. This expansion is a result of the company's cost-reduction strategies and strategic acquisitions, such as the purchase of Blue Star Power Systems and BTH FAST, which have contributed to double-digit revenue growth. Deutz aims to achieve more than 50 million euros in cost reduction by the end of 2026, with a significant portion expected this financial year.
