Growth strategy and planned cost reduction
Deutz recently published a Cost programme announced. According to its press release, the Cologne-based engine manufacturer intends to use this to counteract the cyclical decline in demand.
Deutz presented this cost programme as part of its capital market last Wednesday. At the same time, the company provided information on the further development of its „Dual+“ strategy.
Solutions along the value chain
As the core of the strategic further development Deutz cites a stronger diversification of the portfolio and a positioning in the area of alternative drives that is adapted to demand.
The company is thus continuing the Dual+ strategy it embarked on two years ago. According to its press release, the engine manufacturer intends to build on its successes. According to the company, the achievements to date include initial steps towards market consolidation in the classic combustion engine business, progress in the growth of the service business and a reorganisation of the green portfolio.
According to its press release, Deutz has created a new segment called „Solutions“ as part of its strategic development. This segment includes alternative drives, among other things. In addition, the engine manufacturer says it is grouping together business that goes beyond the production and servicing of engines and is located in markets in which Deutz has mastered technology and service.
„With our new Solutions segment, we will position ourselves much more strongly as a solution provider along the value chains we are familiar with - in order to grow profitably with relevant products and make DEUTZ more resilient overall,“ explains Sebastian C. Schulte, CEO of Deutz.
Cost programme - response to difficult economic situation
With the announcement of its cost programme, Deutz is responding to the ongoing difficult economic situation. According to the press release, costs are to be sustainably reduced by 50 million euros by the end of 2026.
This new cost programme complements the short-term measures that have already been introduced. These measures are expected to have an effect of 18 to 15 million euros as early as the fourth quarter. According to Deutz, these short-term cost-cutting measures include making production more flexible and introducing short-time working.
Oliver Neu, Chief Financial Officer and Labour Director of Deutz AG, explains: „The result of our performance and, above all, portfolio measures over the last two years is that we are earning money even in these difficult times. However, the current situation shows that additional structural measures are needed to position us successfully for the future.“ This will also involve job cuts.