Despite persistently tough economic conditions, demand for the engines and services offered by DEUTZ AG rose slightly in the third quarter of 2009. The volume of new orders received totalled
€206 million, which was some 3 per cent higher than in the second quarter of 2009 (€200 million) and exceeded third-quarter revenue. This confirmed the stabilisation trend that had already emerged in the second quarter of this year.
The summer holiday months of July and August impact on the Company's third-quarter unit sales and revenue every year. Its unit sales and revenue for the third quarter of 2009 amounted to 26,300 engines and €193 million respectively, which was roughly 14 per cent down on the corresponding second-quarter figures because many key European customers had shut down production for the
summer holiday. Consequently, the operating loss (EBIT) of €17.3 million before one-off items was much higher than the loss of €3.5 million reported for the second quarter.
The MOVE restructuring programme launched back in the autumn of 2008 proved particularly successful in the third quarter of 2009. DEUTZ boosted its earnings by €30 million and increased the
MOVE programme's total contribution to the Company's profitability since its launch to €103 million. The ultimate target of €130 million by the end of 2009 is therefore now within reach. The impressive results achieved by the MOVE programme are also evident by the fact that for the first time in several months DEUTZ in September achieved a satisfactory result.
In the first nine months of 2009, DEUTZ generated unit sales of 86,800 engines and revenue of €634 million, which translated into year-on-year decreases of roughly 58 per cent in unit sales and of approximately 46 per cent in revenue. The decline in unit sales owing to the challenging economic conditions affected smaller engines with capacities of less than four litres more severely and
therefore had less of an adverse impact on revenue. The Company incurred an operating loss (before one-off items) of €40.7 million for the first three quarters of 2009 (Q1-Q3 2008: operating profit
of €35.8 million) and a net loss of €87.7 million for the period (after one-off items and income taxes).
DEUTZ remains of the view that demand will not pick up gnificantly during the remainder of 2009 but that its business will remain stable, with unit sales for 2009 as a whole falling by roughly 50 per
cent year on year. Because of the marked shift in unit sales towards larger engines, the year-onyear decrease in revenue will be much lower. Although the scale of the improvements already achieved by the MOVE programme by the end of the third quarter guarantee that the Company will hit its year-end targets, these profitability enhancements will not be sufficient to enable DEUTZ to
break even for 2009 as a whole.
However, the Company is working hard to ensure that it returns to profitability. As Dr Helmut Leube, chairman of the Board of Management, put it: "All the necessary measures have gradually been put in place over the past twelve months. Forecast cost savings, and those that have already been made, will enable us to cut our fixed costs over the long term, which will bring down our break-even point and ensure that we achieve profitability in the medium term even if unit sales are low."
