Deutz Group: H2 2015 will be "significantly worse"

German engine manufacturer expects revenue to decline by 20%, compared with the previously forecasted drop in revenue of 10%

Deutz Group’s headquarters in Cologne, Germany.
Deutz Group’s headquarters in Cologne, Germany.

Deutz Group has revealed that it will not meet its previous forecast for the current financial year.

The German engine manufacturer said that due to “sluggish” business in the current quarter, and “very low” levels of new orders, it expects revenue to decline by around 20%, compared with the previously forecasted drop of 10%.

An ad-hoc statement released by the company on 15 September, 2015, said: “Because business has been sluggish in the current quarter, and the level of new orders is actually very low, revenue is now expected to decline by around 20%, compared with the previous forecast of a drop in revenue of around 10%. Consequently, the second half of 2015 will be significantly worse than the first half of the year.

“Given the low level of business, Deutz will only be just about break even in terms of EBIT [earnings before interest and tax] this year. Until now, an EBIT margin of roughly 3% had been expected,” the statement added.

The firm stated that the current reluctance to invest on the part of end customers means that the inventories of a number of European customers that were built up last year in anticipation of new emissions standards are being used up more slowly than predicted.

The manufacturer has committed to carrying out an analysis of the likely impact of its current level of business on the coming year. It said that further measures to improve earnings are under review.

Deutz said that it would not make any forecasts for 2016 at this point in time.

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