Business performance in the DEUTZ Customised Solutions (DCS) segment

Small rise in new orders compared with 2014

The DEUTZ Customised Solutions (DCS) segment took new orders worth €267.5 million in the reporting year, an increase of 1.3 per cent compared with the 2014 figure of €264.0 million. Unlike the DCE segment, this segment was not affected by the advance production of engines in 2014. With the exception of Stationary Equipment, where new orders fell by 24.7 per cent, and the Other segment, where new orders fell by 28.6 per cent, all application segments received more orders than in the previous year. As at the end of 2015, orders on hand stood at €63.8 million, down by 18.4 per cent on the figure reported a year earlier (31 December 2014: €78.2 million).

Slightly fewer engines sold

Unit sales in the DCS segment declined by 5.4 per cent to 12,567 engines in 2015. Unit sales were down in the Americas region but rose in EMEA, our largest region, and in the Asia-Pacific region. There were significant year-on-year gains for the Automotive application segment, but all other application segments sold fewer engines.

Rise in revenue year on year

In contrast to unit sales, revenue in the DCS segment climbed by 11.9 per cent to €280.2 million in the reporting year. All regions generated growth, with revenue rising by 8.4 per cent in the EMEA region, by 5.8 per cent in the Americas and by 26.0 per cent in the Asia-Pacific region. The only application segment where revenue decreased was Stationary Equipment (by 7.7 per cent). All other application segments saw an increase in revenue: 13.2 per cent for Mobile Machinery, 30.9 per cent for Automotive, 22.7 per cent for Agricultural Machinery and 9.9 per cent for the service business.

Slightly weaker fourth quarter

In the fourth quarter of 2015, new orders in the DCS segment totalled €58.6 million, down by 15.9 per cent year on year and down by 14.1 per cent on the previous quarter. There were also fewer unit sales in the final three months of the year, with a year-on-year decrease of 37.8 per cent to 2,927 engines. However, unit sales had been exceptionally high in the fourth quarter of 2014, especially in this segment’s smaller power output categories. However, unit sales rose by 1.9 per cent compared with the third quarter of 2015. The revenue attributable to the DCS segment in the final quarter fell by 4.9 per cent year on year to €71.5 million, but nonetheless was 7.0 per cent higher than in the third quarter of 2015.

DEUTZ Customised Solutions: Revenue by application segment

Chart: DEUTZ Customised Solutions: Revenue by application segment

Vast improvement in DCS’s operating profit

The operating profit of the DEUTZ Customised Solutions segment for the reporting year was €31.3 million (2014: €18.8 million). This sharp increase compared with 2014 is due, in particular, to the larger volume of business and to positive currency effects. Furthermore, the prior-year figure had included impairment losses of €9.5 million recognised on intangible assets and on property, plant and equipment and of €1.8 million recognised on equity-accounted investments. In 2015, impairment losses totalling €2.6 million were recognised on intangible assets and on property, plant and equipment.

Other

The operating profit reported by the Other segment came to €5.5 million (2014: operating loss of €2.3 million). This positive trend was due, above all, to the sale of the shares in WEIFANG WEICHAI-DEUTZ DIESEL ENGINE CO., LTD., Weifang, China, and the cancellation of a liability denominated in a foreign currency. This liability consisted of an outstanding contribution to the issued capital of DEUTZ Engine (China) Co, Ltd. in Linyi, China. The decision to wind up the company cancelled this obligation in the third quarter of 2015, thereby eliminating the unrealised negative currency effect that had applied in 2014.