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DEUTZ AG: High hopes for 2021 following a successful start to the year for DEUTZ - Seite 2

DEUTZ also forged ahead with the ongoing expansion of its high-margin service portfolio in the reporting period. At the start of 2021, the Company added to its analog service concepts by launching a Lifetime Parts Warranty for engines that have been registered with DEUTZ online. Recording these engines in the internal service systems is an important step to be able to further optimize DEUTZ's service offering and strengthen customer loyalty. Activity under the regional growth initiatives included expansion of the service network in the USA: The establishment of a new DEUTZ Power Center got under way in the Dallas metropolitan area. The ongoing expansion supports the planned increase in total revenue of the profitable service business to around €400 million by the end of 2021.

At the start of February, DEUTZ signed a long-term supply agreement with agricultural equipment manufacturer SDF. As well as the supply of engines with a capacity of below and above 4 liters, the agreement includes expansion of the service business between the two companies and is expected to result in additional annual revenue in the low-double-digit millions of euros.

DEUTZ CFO Dr. Sebastian C. Schulte reported on the progress with the efficiency program: "The restructuring measures that we have initiated are already having a noticeable positive impact. For example, the cost savings achieved enabled us to significantly improve our profitability in the reporting period. This shows that we are on the right track to be able to lower the break-even point to our target of 130,000 DEUTZ engines." By the end of 2022, DEUTZ intends to realize potential cost savings of around €100 million gross per year, compared with the base year of 2019. Another important milestone in this context was achieved with regard to the voluntary redundancy program, which originally aimed to reduce the number of positions by 350 but had been taken up 361 employees by the time that the program ended.

New orders up sharply by around a third
On the back of market demand that was better than originally expected, new orders received by DEUTZ in the first quarter of 2021 jumped by 30.3 percent compared with the first quarter of 2020 to reach €464.8 million. All of the regions and main application segments recorded double-digit percentage increases. As at March 31, 2021, orders on hand stood at €394.3 million, which was up by a substantial 47.6 percent year on year. Within this figure, orders on hand in the high-margin service business rose by an impressive 50.0 percent to €31.8 million.