German engine manufacturer 201 Deutz Group warned that a third quarter dip in sales revenue and warranty issues concerning its Compact Engines segment meant the company will not meet its previous forecast for the financial year 2014.
A statement from the Cologne-based company said “significant costs will be incurred over the coming years in connection with warranties and goodwill for engines from the DEUTZ Compact Engines segment, primarily relating to engines manufactured in 2011”.
In the third quarter of 2014, there was an unexpected charge against earnings of €20.4 million warranty costs, net of limited insurance claims. “We are currently examining whether we have any further insurance claims,” the company said.
New orders in the third quarter of 2014 stood at €330 million, down from €360.1 million for the same period last year. But revenue amounted to €424.6 million, up from €381 million in Q3 last year, for a year-on-year increase of 11.4%)
Operating profit (earnings before interest and taxes, EBIT) was €23.1 million (Q3 2013: €17.1 million, for a year-on-year increase of 35.1%). The EBIT margin was 5.4 per cent (Q3 2013: 4.5%). After taking the recognition of provisions into account, there was an operating profit of €2.7 million and the EBIT margin was 0.6%.
In the DEUTZ Compact Engines segment, new orders in the third quarter of 2014 totalled €270.4 million (Q3 2013: €303.1 million) and revenue stood at €368.3 million (Q3 2013: €315.1 million). The EBIT margin, excluding the unexpected charges exclusively for this segment, was 5.3% (Q3 2013: 2.3%).
After taking the recognition of provisions into account, the EBIT margin came to -0.2%.
New orders for the third quarter of 2014 fell below expectations because of the general economic slowdown. “Against this background, we expect to generate revenue of around €1.5 billion in the current financial year. This represents an increase of around 3% compared with 2013.”
Deutz will issue a new earnings outlook and more detailed disclosures regarding the third quarter of 2014 when the full quarterly report is published on 6 November.
A statement from the Cologne-based company said “significant costs will be incurred over the coming years in connection with warranties and goodwill for engines from the DEUTZ Compact Engines segment, primarily relating to engines manufactured in 2011”.
In the third quarter of 2014, there was an unexpected charge against earnings of €20.4 million warranty costs, net of limited insurance claims. “We are currently examining whether we have any further insurance claims,” the company said.
New orders in the third quarter of 2014 stood at €330 million, down from €360.1 million for the same period last year. But revenue amounted to €424.6 million, up from €381 million in Q3 last year, for a year-on-year increase of 11.4%)
Operating profit (earnings before interest and taxes, EBIT) was €23.1 million (Q3 2013: €17.1 million, for a year-on-year increase of 35.1%). The EBIT margin was 5.4 per cent (Q3 2013: 4.5%). After taking the recognition of provisions into account, there was an operating profit of €2.7 million and the EBIT margin was 0.6%.
In the DEUTZ Compact Engines segment, new orders in the third quarter of 2014 totalled €270.4 million (Q3 2013: €303.1 million) and revenue stood at €368.3 million (Q3 2013: €315.1 million). The EBIT margin, excluding the unexpected charges exclusively for this segment, was 5.3% (Q3 2013: 2.3%).
After taking the recognition of provisions into account, the EBIT margin came to -0.2%.
New orders for the third quarter of 2014 fell below expectations because of the general economic slowdown. “Against this background, we expect to generate revenue of around €1.5 billion in the current financial year. This represents an increase of around 3% compared with 2013.”
Deutz will issue a new earnings outlook and more detailed disclosures regarding the third quarter of 2014 when the full quarterly report is published on 6 November.
