OVERVIEW OF 2010
Looking ahead with renewed strength
Impressive recovery of global economy
The first signs that the world economy would rapidly start to bounce back had emerged at the end of 2009. However, everyone involved was nevertheless taken aback by the strength and sustainability of the upturn. Germany's economy grew by 3.6 per cent on average in 2010 and it even recorded a year-on-year increase of 9.5 per cent in the second quarter. Global growth of an estimated 4.8 per cent was driven by the BRIC countries (Brazil, Russia, India and China) in particular.
Business performance at DEUTZ much better than forecast
We also considerably exceeded our conservative projections for 2010. We sold approximately 168,000 engines, which was 42 per cent or 50,000 engines more than in 2009. The success of the measures we took to cut costs and boost efficiency was reflected in our operating profit (EBIT before one-off items) of €42.2 million.
Assembly and production flexibly adapted to high demand
The economic crisis had meant that our suppliers' capacities had also been significantly reduced. It was therefore a particular challenge for us to adapt both their capacities and our own production and assembly units to the sharp rise in demand. We ended all short-time working at the end of the first quarter and introduced additional shifts, including a 20-shift model per week in some production units. By planning the production programme in very close cooperation with our suppliers and by finding additional support suppliers, we ensured that the supply of materials was as seamless as possible. Moreover, despite good capacity utilisation we managed to achieve a working capital ratio of 9.5 per cent of revenue as at the balance sheet date1), the first time that this figure has fallen below 10 per cent.
The replacement of the creditors from the US private placement with a syndicated bank loan in mid-December 2010 marked the successful completion of the negotiations to restructure our funding.
New engine development and adaptations for future emissions standards well under way and on schedule
In 2010, research and development was very much focused on the new exhaust emissions standards that come into effect in 2011 and beyond and on the development of two new engine types that are due to go into series production in the next two years. The projects are well on course as a result of our hard work in this area. With its leading quality and technology, DEUTZ is now 'one step ahead'!
1) Working capital ratio as at the balance sheet date: ratio of working capital (inventories plus trade receivables minus trade payables) at the end of the financial year to revenue for the last twelve months