Deutz Swings to Profit in First Quarter Boosted by Restructuring

Deutz AG (DEZ), a German manufacturer of engines for trucks, ships and farm equipment, swung to profit in the first quarter as cost-cutting efforts gained traction.

Earnings before interest and taxed amounted to 1.9 million euros ($2.6 million) compared with a loss of 6.4 million euros a year earlier, the Cologne-based company said in a statement today after its quarterly report was seen by Bloomberg News after being temporarily posted on its website. Revenue advanced 18 percent to 343 million euros.

“Deutz in the first-quarter 2014 continued the good operational development of the previous year,” the board of management under Chief Executive Officer Helmut Leube said in the report, which was accessible ahead of the scheduled release on May 5. “We continue to work on optimizing our costs and structures.”

The 150-year-old manufacturer, which has production locations in China, Argentina and the U.S., is in the process of closing sites in Germany to streamline manufacturing. It also plans to outsource some engine production. In the report, Deutz stuck to its forecast for Ebit, excluding one-time costs, to reach more than 4 percent of sales this year.

“The company reiterated its 2014 guidance, so the coming quarters will probably improve,” said Christian Ludwig, a Dusseldorf-based analyst with Bankhaus Lampe.

Deutz gained as much as 5 percent to 6.31 euros in Frankfurt today and was trading up 3.1 percent at 4:00 p.m. The stock has lost 4.4 percent this year, valuing the company at 749 million euros.

Spending on the reorganization, which is aimed at lifting profit by more than 10 million euros annually from 2016, is expected to amount to as much as 20 million euros this year.

New orders in the quarter increased 6.6 percent to 414 million euros. The company narrowed the net loss to 0.5 million euros from 6.9 million euros.

To contact the reporter on this story: Dorothee Tschampa in Frankfurt at dtschampa@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net Chris Reiter, Angela Cullen

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