21.10.2014

Deutz lowers forecasts

Deutz engine has lowered its full year forecasts due to a weaker third quarter and unplanned warranty costs.

A statement from the company said: “Significant costs will be incurred over the coming years in in connection with warranties and goodwill for engines from Deutz Compact Engines, primarily relating to engines manufactured in 2011".

The third quarter charge will total €20.4 million for unplanned warranty costs, net of insurance claims. The company is also checking on any further insurance claims. Compact engines represent the bulk of the company’s revenues and profits.

Third quarter orders were down 8.5 percent compared to last year at €330.0 million although revenues were up 11.4 percent to €424.6 million operating earnings were over 35 percent at €23 million, but most of this will be wiped out by the extra warranty provision.

The statement went on to say: “As a result of the general economic slowdown, new orders for the third quarter of 2014 fell below our expectations. Against this background, we expect to generate revenue of around €1.5 billion in the current financial year. This represents an increase of around three percent compared with 2013”.

Deutz will issue a new forecast when it issues its final third quarter earnings report.