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Deutz wins Record Level of new Orders

COLOGNE/GERMANY, August 23, 2013 - The quarterly report recently presented by the company shows that Deutz AG delivered impressive results in the first half of 2013. In the first six months of this year the Company won the highest level of new orders ever achieved under its current business structure.

The total volume of new orders received in the first half of 2013 grew by more than 20 per cent year on year to €843.5 million (H1 2012: €701.0 million). The number of engines sold fell by 8.5 per cent compared with the corresponding period of 2012 to 85,907 units (H1 2012: 93,853 units). First-half revenue declined by only 2.8 per cent year on year to €662.1 million (H1 2012: €681.0 million). This means that revenue continued to outperform unit sales thanks to the growing proportion of higher-value engines that meet the new emissions standards. Orders on hand stood at €352.9 million on 30 June 2013. This was up by 41.4 per cent on the figure a year earlier (30 June 2012: €249.6 million) and up by almost 30 per cent compared with the end of March 2013.

Operating profit amounted to €10.1 million and had therefore roughly halved compared with the first six months of 2012 because business volumes had contracted and amortisation of completed development projects had risen sharply owing to a number of product launches over the previous twelve months.
Deutz significantly improved all the relevant key figures for the second quarter of 2013 compared with both the previous quarter and the second quarter of 2012. Second-quarter revenue in 2013 came to €372.2 million, which was approximately 28 per cent higher than in the first quarter of this year (Q1 2013: €289.9 million). The second quarter of 2013 also saw a substantial increase in operating profit (EBIT), which rose by €22.9 million compared with the previous quarter to €16.5 million (Q1 2013: operating loss of €6.4 million). In addition, cash flow continued to strengthen encouragingly. Free cash flow also grew strongly, producing the best figure since the year 2000. This was reflected in Deutz's net financial position, which had improved by €73.2 million year on year and amounted to minus €44.9 million as at 30 June 2013. "This improved cash flow situation, combined with the favourable funding structure, have resulted in a significant improvement in net interest expense. Consequently, we generated net income of €12.3 million in the second quarter of 2013," commented Chief Financial Officer Dr Margarete Haase.
This strong operating performance, which had begun to emerge in the previous quarter, is a result of the Company's product offensive, which is reflected in the number of new customer projects, new applications for existing customers and, not least, the volume of new orders – especially for the new TCD 2.9 and TCD 3.6 engines.

The Company's 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, it reported a modest operating profit for the first half of 2013 thanks to its higher revenue and improved efficiency. Given the impressive performance of the Company's business in the second quarter and the large volume of orders on hand, Dr Helmut Leube, Chairman of Board of Management, reaffirmed the forecast for 2013 as a whole: "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 EBIT margin is predicted to exceed 3.0 per cent. 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.”