Business performance in the DEUTZ Compact Engines (DCE) segment

More orders than in 2015

In the year under review, the DEUTZ Compact Engines (DCE) segment received new orders worth €1,011.6 million, which was 5.6 per cent up on 2015 when orders worth €958.4 million were received. At 13.8 per cent, Construction Equipment recorded the highest growth among the application segments. Material Handling, Agricultural Machinery and the service business also saw increases of 7.8 per cent, 7.1 per cent and 6.7 per cent respectively. However, new orders fell in the Stationary Equipment and Automotive application segments by 17.9 per cent and 3.9 per cent respectively. Orders on hand amounted to €145.5 million at the end of the year, up by 6.0 per cent compared with the end of 2015.

Slight year-on-year fall in unit sales

The DCE segment's unit sales dropped by 1.6 per cent to 123,179 engines. The number sold in the previous year was 125,214 engines. In EMEA, our largest market, we sold 83,017 engines, which was 2.0 per cent more than in 2015. Unit sales went down by 13.1 per cent in the Americas region but rose by 9.8 per cent in the Asia-Pacific region. There were increases in the Construction Equipment, Agricultural Machinery and Miscellaneous application segments, while all other application segments sold fewer engines.

Higher revenue

At €1,000.8 million, revenue in the DCE segment was up by 3.5 per cent year on year (2015: €967.2 million). As was the case at Group level, revenue thus increased despite the small decrease in unit sales. The EMEA region's revenue advanced by 5.5 per cent to €721.2 million. However, that of the Americas region dropped by 12.1 per cent to €200.4 million. The Asia-Pacific region's revenue climbed by a considerable 43.0 per cent to €79.2 million. Revenue rose by 11.8 per cent in the Agricultural Machinery application segment, by 9.8 per cent in the Construction Equipment application segment, by 4.2 per cent in the service business and by 1.0 per cent in the Material Handling application segment. By contrast, Stationary Equipment and Automotive revenue was down by 15.6 per cent and 5.4 per cent respectively.

Q4 2016 better than comparison periods

In the DCE segment, new orders reached €267.9 million in the fourth quarter of 2016. This was 14.3 per cent more than in the fourth quarter of the previous year and 34.5 per cent up on the previous quarter. Unit sales rose by 8.2 per cent year on year to 29,869 engines and also exceeded the figure for the previous quarter by 4.8 per cent. Revenue in the final quarter of 2016 amounted to €251.1 million, which was 5.9 per cent more than in both the fourth quarter of 2015 and the third quarter of 2016.

DEUTZ Compact Engines: Revenue by application segment

Chart: DEUTZ Compact Engines: Revenue by application segment

DCE’s operating profit improved

The DEUTZ Compact Engines segment reported an operating loss of €6.1 million in 2016 (2015: operating loss of €31.9 million). This substantial improvement of €25.8 million is mainly the result of savings on the cost of materials and the higher volume of business. A positive shift in the product mix that benefited our new engine series also contributed to this improved result for the segment. Moreover, the operating profit for the segment in the prior year had been adversely affected by impairment losses totalling €7.1 million on intangible assets and on property, plant and equipment. Impairment losses of €1.5 million were recognised in the reporting year, mainly on property, plant and equipment of our subsidiary DEUTZ Engine (Shandong) Co., Ltd.