DEUTZ Aktiengesellschaft Q2 Earnings Call Highlights

DEUTZ Aktiengesellschaft ETR: DEZ reported higher first-half orders, revenue and earnings as its expanding energy, service and defense operations helped offset continued weakness in its legacy engine market. For the first six months of 2026, new orders rose 29% year over year to €1.3 billion, while revenue increased 11% to €1.1 billion, Chief Executive Officer Sebastian Schulte said during the company’s first-half conference call. The adjusted EBIT margin was 7.1% for the period, including a 7.2% margin in the second quarter, up 1.4 percentage points from a year earlier. “The engine business still remains on a rather low level,” Chief Financial Officer Oliver Neu said. “That means the 7.2% margin we achieved in Q2 is a margin we achieved in a weak engine market.” He said the company has raised margins in six of the past seven quarters through cost discipline, restructuring measures and growth in service, energy and defense.

DEUTZ said its energy business was its largest absolute contributor to growth among its business units during the first half. The company acquired Brazilian energy company MAXI TRUST during the second quarter, following its acquisition of Frerk Aggregatebau in Germany. It also cited organic growth in the U.S., Morocco and China. Energy business new orders totaled €55 million in the second quarter, including €10 million from MAXI TRUST’s consolidation. The unit’s order backlog reached €220 million, while its second-quarter EBIT margin recovered to 13.7% from a weaker first quarter affected by consolidation and seasonal effects. Schulte said DEUTZ is targeting more than €300 million in profitable energy revenue this year, while adding that its current planning indicated a range of roughly €320 million to €330 million. He said the company expects a stronger second half for the unit, partly because Frerk and MAXI TRUST were not consolidated for the full first half and because Frerk’s deliveries are weighted toward the latter part of the year.

Service revenue exceeded €150 million in the second quarter for the first time, supported by the expansion of DEUTZ Power Centers in the U.S. and the acquisition of California-based G&T Truck Repair in June. First-half service order intake rose 16.1% year over year, and the division’s order backlog increased to €57 million from €42 million a year earlier. Schulte said the service margin was modestly diluted as DEUTZ invests in technicians and additional infrastructure to support future growth. He also said a greater mix of work performed on machines, rather than higher-margin spare-parts sales, contributed to the effect. Nevertheless, he characterized the service unit as margin-accretive at the group level.

In the Engines business, DEUTZ reported a €385 million order backlog, compared with €315 million a year earlier. The company produced about 68,000 engine units in the first half, according t...