Deutz AG

DEUTZ reported H1 2026 new orders of EUR 1.3 billion, up 29% year over year, revenue of EUR 1.1 billion, up 11%, and an EBIT margin of 7.1%. In Q2, new orders were EUR 560 million, revenue was EUR 585 million, and the margin was 7.2%, or 1.4 percentage points higher year over year. EBIT increased 43.1% to almost EUR 80 million, and net income rose to EUR 33.5 million despite a EUR 12.5 million provision for the voluntary program. Management confirmed 2026 guidance for revenue of EUR 2.3 billion to EUR 2.5 billion and an EBIT margin of 6.5% to 8%, and said H2 should be stronger, especially in Energy and Defense; it also said FFG closing is expected by the end of 2026, with the combined defense business expected to exceed EUR 1 billion of revenue next year.

Sebastian Schulte framed the first half as evidence that DEUTZ’s transformation is working, with growth increasingly coming from service, energy, and defense rather than the cyclical engine business. He stressed that the company can now influence its performance through portfolio mix, footprint changes, and cost actions, and said the engine business is already earning margins that would have been unthinkable at low utilization in the past. On FFG, he called it a pivotal, strategically aligned transaction that adds scale, backlog, and a NATO-wide defense platform, and said DEUTZ in 2027 will be “completely different, larger, more profitable.”

Oliver Neu emphasized that the 7.2% Q2 margin came in a weak engine market, which he said shows the transformation is on track. He cited EBIT of almost EUR 80 million, net income of EUR 33.5 million, free cash flow before M&A of minus EUR 29.7 million, and net debt of EUR 520.5 million including roughly EUR 92 million of leasing. He also pointed to a lower R&D ratio of 4.0% of sales versus 4.5% a year ago, explained that working capital was inflated by acquisitions and inventories, and said H2 should benefit from a EUR 60 million to EUR 70 million working-capital reduction.

Analysts focused on the second-half run rate for orders, gross margin seasonality, OpEx, organic growth, and cash flow conversion. Management said Q2 order intake and market trends were broadly in line with expectations, noted that construction customers in the U.S. are showing positive signs, and said energy and defense should be stronger in H2 because of acquisitions, seasonal delivery patterns, and backlog conversion. On free cash flow, management said the H2 improvement should come from both stronger operating cash generation and a working-capital release, especially inventories, and on the medium-term targets it said a formal update will come later in the second half after more detailed planning for FFG under IFRS.