Deutz Ag Akt

Good morning, ladies and gentlemen, and a warm welcome to the Q1 2026 conference call of the Deutz AG. Please note that this call is being recorded and a replay will be available on deutz.com later today, so your participation in that call implies your consent to this. I'm pleased to welcome Deutsche CEO Sebastian Schulte and CFO Oliver Neu. And as always, please take a note at our disclaimers, especially regarding forward-looking statements. So with this, we start the presentation and I'm handing over to the Head of Investor Relations, Communications and Marketing, Lars Böcke.

Thank you, Sarah. And a very good morning from my side as well, from Cologne. Thank you for participating in our today's conference call. I'm glad to welcome you. as it is the first time we report in our new structure with five business units, reflecting the different markets and thus providing even more transparency and clarity. At the beginning of the presentation, Sebastian Schulte will share views on key figures of Q1 and then provide an implementation update or strategy along these five new business units. Obviously, next, our CFO Oliver will give a detailed overview on the Group's financial performance. With a look at the guidance and how the strong Q1 momentum is pushing financial year performance, Sebastian will wrap up the course and move forward to your questions.

Sebastian, please go ahead. Thank you very much, Lars, for the introduction of words. And from my side, a very warm welcome as well to our Q1 earnings call 2026. And, you know, we started really, really positively into this exciting but also challenging year 2026. So Deutz 26 is all in the light of transformation, but also in the light of growth, profitability and successful start, as I said. A couple of highlights which are behind us or where we are in the middle of it. Let me be more precise. So first of all, and that was really an exciting moment for all of us. We were promoted from the S-DAX to the M-DAX, which is a nice milestone, a nice recognition of successful work the teams at Deutz have been performing. And obviously that's a result also of an above market share price performance. We see it here for the last For the last half a year where we compare our stock performance with the MDAX performance, we're clearly ahead of the index. And if you look, if you were to look back at 24, the gap is even more significant. So that's a sign that our work's paying off. Frerk acquisition in our energy business unit, I'll come to that later, gave us an order intake impact of almost 150%. contributing to the growth, but it's not the only contributor to the growth. And what I find particularly encouraging, quite frankly, is that next to all the successful ramp up of new business units, also the sort of heritage business unit, our engine business unit, but also supported by service, sees quite positive momentum in very relevant markets, namely construction and agriculture. So all in all, A lot of positive points in our transformation. And no surprise that with all these positive points, we also see that reflected in the numbers. New orders have been up significantly, 41% year over year, 771 million euro order intake, new orders. That's great. Revenue at 530 million, it's also up 8%. So one of the highest numbers on a quarterly basis has delivered, well, in the company's history. And the same applies for the EBIT margin. We are now at 7% EBIT margin, which is also 1.8 percentage point better year over year. And we always need to bear in mind that the first quarter of the year is typically not the seasonally strongest quarter of Lloyd's. And in fact, that's also underlined by the fact that since the start of the downturn, the end of 23, that is the best quarter we have achieved. So very encouraging news. Important, I'd like to repeat that we've shown that at the annual results call earlier this year. We've also started, Lars said it in his introductional words, into the new year with a new structure, and a structure which clearly follows the company's strategy. So we introduced a business unit set up in January 26, and next to the group-wide management, Oliver, the CFO, Katarina, EVP for HR, strategy transformation. We have now in charge, dedicated business unit leads, Marco for defense, David for energy, Marcus for engines, Bert for new tech, and Andreas for services. And that's more than just an organigram. It just shows that we take our strategy seriously. We've implemented the structure to have a responsibility on a P&L basis for each of the business units, even though they are at this point in time still different in size, but all extremely relevant. So that's why we needed this clear responsibility. And I can tell you the setup is working extremely well since we implemented it. Well, let me now walk you through the business unit by business unit. And I start with the largest business unit, with the business unit engines. And what happened at engines in the first quarter? It's positive again. Back in black, that is great. And we also see very positive momentum in order intake. I'll show that here on these numbers. We'll not go through this all in detail, but what you see here is particular if you compare Q126 with Q125. In terms of revenue, only slightly up, 5.3%, but we'll see where we were in Q3, for example, but in terms of new orders, up 26%. So that means the fundamentals become stronger. There is a certain recovery in certain sectors, particularly very important construction and agri sectors for us. And we also see the growth dynamics in all regions. There's even a particular momentum in China. That's the smallest region for us. But that was contributing here with high margin business as well. Profitability went up significantly. You see that. But at that point last year, we were slightly negative. This is a like for like comparison. So you will not see these numbers in the presentations of last year, Q125, because we're bringing here the numbers into place so that we compare apples with apples. So profitability went up significantly. Yes, of course, high utilization, but also the cost savings of FutureFit program. We will hear from Oliver later, as well as obviously the positive order momentum. Sales growth with new products, there is a significant strong interest also in our new engines. We introduced a couple of weeks ago our G-Drive initiative, like engines for power generation. We hosted that here in Cologne. After an important trade fair in Dubai was cancelled, so we hosted that here, we received strong interest, more than 30 potential customers were there. And this is something we do not even see in the new orders yet, but we expect that to materialize in new orders in the coming quarters. And of course, very important strategic work we're doing with the team, Markus and his team are doing. We are streamlining, aligning here our portfolio and also the footprint in order to further push the profitability because obviously 3.7% is a great development compared to previous years, but that should not be the end of what is possible. We're working also on efficiency here in our main assembly plant in Cologne Ports. The noticeable savings potential has been identified and is being implemented. So here we clearly see that the new responsibility we put in place is beginning already to pay off. So all in all, engines on a good development, both from a top line market driven, but also obviously from what we have under control in our internal measures. Let me move on to service. And service, you see here a picture. It's a great picture, actually. This is our material, our logistics center, also here in Cologne, where we implemented an outdoor store that's AI-driven storage management, which significantly reduces costs but also increases capacity for our spare parts. Most is extremely relevant, given that in service we are on a growth path. And in March, and I'll come to the quarterly numbers in a bit, but in March, the service business for the first time yielded revenue significantly above 50 million euros. And that's great. I mean, two years ago, three years ago, we were always around the 40 million. Now we're at 50 million. And that shows that on a monthly basis, we are proving here the run rate is significant. You see that here also in the numbers. In the last year, we were always between 130, 138. Now in Q1, we're at 148 million euros. And that's particularly driven by February and March, given January is always a bit of a weak month. And also the... Also, this growth came across all regions, both driven by parts, but also after sales business and integration of our acquisitions. We did a few acquisitions in the United States as well as in Europe. I mentioned the 50 million revenue already. The traction we're improving is also by our international network expansion. the logic is very simple the more services that we have the more profit uh we we achieve right we do have uh we do follow further growth investment in our regional infrastructure particular in europe and the americas we're opening uh new power centers across the nation in the us and that um for that is the only sort of um the only sort of uh critical point we'll see at this point in time is that the ramp up reduced the margins a little bit, but on a very, very high level. And also the margin Q125 was a little higher than normal because at that point we had a very high share in spare part business. We expect normalization across 2026. So by no means this is a problem with margins. It's actually a very healthy, profitable growth going forward. Let me move on to energy. Besides to defense, our sort of biggest growth case at this point in time, and I showed it, I said it initially, growth momentum comes obviously in particular from the new acquisition of FRAC, which is, as you know, active, particularly the data center business, which is a market which enjoys not only now, but also in the next three, four, five years, at least a very high growth momentum. Looking at numbers, Q1 was also the first time here. The revenue was at 50 million. Obviously, a bit driven already by the anorganic effect from the acquisition of Frerk, which joined us. The closing happened in the middle of the first quarter. So that's why here it's not really a like-for-like comparison if I compare Q1 26 with Q1 25. So 145 million of order intake was contributed by Frerk. And now we have a new orders of just above 200 million and we have an order backlog of 240 million in the business unit energy. So that means the visibility of this business is extremely strong and that applies to both top line as well as bottom line. I will come to that in a minute. We're making extremely positive progress with the business unit energy to really create a global unit. FIAC is obviously supporting in Germany, but also in neighboring countries, DPX, our Chinese setup. is supporting out of China to also drive growth in Europe and of course in Asia. We do have a little margin dilution in the first quarter, particular driven by ethics in the United States, as well as changing the product mix. But we expect a significant improvement in the second quarter. So the numbers we see here, you want 25. That's more the level of profitability we expect throughout the year. So that's why this is a temporary thing. And we will come later in this presentation also on the guidance for the full year, where we will also give you a little bit of details on the guidance for the business unit. So the guidance we provide you for energy is very safe and sound at this point in time. And the growth perspective, as I said already, is continuing to remain extremely dynamic, particularly because of that data center opportunities we have in Europe. But also, Blue Star continues to grow above what we initially had foreseen. And on a smaller scale, but very encouraging, our North African genset business in Casablanca and Morocco, Magidoid's, We always explained that was a bit of a turnaround case. The turnaround has now been achieved. The company is EBIT positive and also enjoys growth, obviously on a smaller scale with an annual top line in the mid-20 millions of euros. And of course, one important aspect of creating a global energy business is obviously that we are now implementing more and more synergies, not only within the business unit energy, but because we're building really something global, applying the capabilities, data centers we have with FRAC. in also other parts of the planet, but also utilizing our service footprint, which historically has been created for combustion engines, but now we're beginning to utilize this for our energy business. Let me move on to the business unit NewTek. So I call it internally and also externally at this point in time, a bit like a growth option. A growth option with very, very positive dynamics and outlook. But at this point in time, it's still rather an option than already secured top line. And you see that in the numbers here, the revenue is still on a low level. I mean, it's growing, but growth here from Q125 to Q126, that is not a relevant number, of course. 64% is not much better than it is. It is still a small business. We do see new orders coming in. We have obviously also an order backlog. But that is still on a sort of prototype on a small, serious scale. We do, in this point in time, work particularly to improve the earnings because it is obviously still a lot of upfront investment, R&D activities. And that's why we managed here to significantly reduce the quarterly losses. We cut them in half, pretty much coming from minus 12 to minus 6%. And a big focus in this business unit is obviously converting the very promising large pipeline into actual revenue. And we're working here with a couple of promising large customers. But part of the truth is also that we have not yet secured a large order. But we're working on that. And why I consider this a bit of an option value, because obviously as soon as we see or we would see pressure from electrification in particular into the lower power ranges in, let's say, our construction business, then obviously this business here will start to pick up speed. So that's why it's an important option value. It's an important business to be involved in. And we can and will further support, obviously, the growth in new tech. That brings me to the last but certainly not least business unit defense, and to be very accurate, defense as well as others. So we also include here the business of IOTS, the Emission After Treatment Specialist. And defense, you see here that fantastic picture where our Ulm plant has shown that we have the capabilities of assembling here unmanned vehicle systems from our partner arcs robotics that's an exciting project we're working on together with arcs and here it's about increasing relevance and really really building a strong and strong business model looking at numbers um here this is a business unit which has only been created uh by the end of last year pretty much uh so before and it was more rather a collection of own businesses of own of own projects but latest with the acquisition of the sovic group we really created that business unit that's why we don't have a meaningful quarter over quarter comparison in terms of profitability but what we see here is that the business becomes more and more relevant q425 was driven by a few large-ish orders, very, very strong with almost 30 million euros. Now we're at 22.1 million in Q1. We enjoy a lot of new orders, 26 million order intake. So here also gross dynamics is in place. The order backlog is at almost 40 million right now. And without, at this point here, being able to release names of the customers, but we did receive in the first quarter first significant or relevant orders relating to the loitering drone package that the German army ordered at a couple of drone OEMs. And in one of them, we are the supplier of the drive systems. That relates to the ramp up of Sobeck because that's the part of Deutz which actually provides here the drive systems and we are also continuing to invest R&D in particular in new car train solutions and that applies especially also to the field of the diesel engines where we are enhancing our current product portfolio to make it sort of defense ready. Also the The Hyadessa I mentioned earlier, Hyadessa Emission, it's been bought by us as a turnaround case. Now it's working actually quite successful. We were able to integrate some of their production into our supply chain. That's important. And we're continuously committing also to that DevTech ecosystem with, I mentioned it earlier already, the investment in ARX Robotics, but also the investment and the supplier relationship to Titan Technologies. So What's about here? It's a conversion really of an extremely strong pipeline into sense. We'll have a lot of very promising conversations, project negotiations, discussions. Obviously, the Ukraine plays an important role here. And we're continuously working on exploring more and more opportunities, both in terms of drive systems, but also in terms of military energy solutions. And that will always include partnerships and M&A. So there's certainly more interesting news in the making throughout this year. So 13% margin level, I think that's a fair margin quality, given the combination here of the traditional sort of defense business, as well as the higher S contribution. So we have created here a pillar which is attractive to the business and which is enjoying significant growth in the next month to come. Right. With that short run through the business units, I will hand over to Oliver, who will bring some more light on the financial aspects of our first quarter.