Business performance in the DEUTZ Customised Solutions (DCS) segment
New orders fall year on year
In 2016, the DEUTZ Customised Solutions (DCS) segment received new orders worth €249.8 million, which is 6.6 per cent less than in 2015 when orders worth €267.5 million were received. There were year-on-year decreases in all application segments. As at the end of 2016, orders on hand stood at €45.5 million, a decrease of 28.7 per cent on the figure reported a year earlier (31 December 2015: €63.8 million).
Engine sales down by a quarter
Unit sales in the DCS segment declined by 25.5 per cent to 9,360 engines in 2016. This trend was repeated across all regions and, apart from Agricultural Machinery, across all application segments.
Far smaller drop in revenue than in unit sales
In the reporting period, the DCS segment's revenue fell by 7.4 per cent to €259.4 million. All regions registered decreases in revenue: by 5.8 per cent in the EMEA region, by 16.9 per cent in the Americas and by 4.8 per cent in the Asia-Pacific region. Revenue also went down in all application segments; only the service business generated a further increase of 1.8 per cent to reach €119.9 million.
Weaker fourth quarter
In the fourth quarter of 2016, new orders in the DCS segment totalled €58.2 million, down by 0.7 per cent year on year and down by 1.2 per cent on the previous quarter. A total of 2,231 engines were sold in the final quarter, which constituted a substantial year-on-year decrease of 23.8 per cent but was on a par with the third quarter of 2016. At €63.6 million, the DCS segment's revenue dropped by 11.0 per cent compared with the fourth quarter of 2015 and by 0.5 per cent compared with the previous quarter.
DEUTZ Customised Solutions: Revenue by application segment
DCS’s operating profit holds steady at a high level
The operating profit of the DEUTZ Customised Solutions segment for the reporting year was €32.7 million (2015: €31.3 million). With the volume of business having reduced, this increase of €1.4 million is mainly attributable to a contribution to profits from the licensing transaction of €5.5 million at the start of the financial year. The operating profit for the segment in 2015 had been adversely affected by impairment losses totalling €2.6 million on intangible assets and on property, plant and equipment.
The operating loss reported by the Other segment came to €3.2 million (2015: operating profit of €5.5 million). In 2015, operating profit had been boosted by the sale of the shares in WEIFANG WEICHAI DEUTZ DIESEL ENGINE CO., LTD., Weifang, China. The figure for 2016 includes a loss of €1.4 million arising from the deconsolidation of DEUTZ Engine (Shandong) Co., Ltd., Linyi, China. This company is currently being wound up and no longer has any operational or strategic significance to the DEUTZ Group, so it has been deconsolidated for reasons of materiality.