What DEUTZ Aktiengesellschaft (DEZ) Said on Its Q3 Earnings Call

Key Points

• Nine-month results strengthened: Orders rose 30% to nearly €2 billion, revenue increased 11% to about €1.7 billion, and adjusted EBIT climbed 36% to €118.2 million. DEUTZ expects its full-year adjusted EBIT margin at the upper end of its 6.5%–8% range, while maintaining revenue guidance of €2.3 billion–€2.5 billion.
• FFG acquisition closed ahead of schedule: The nearly €1.6 billion deal makes FFG the anchor of DEUTZ’s defense unit; DEUTZ estimates FFG will contribute about €100 million in 2026 revenue. On a stand-alone basis, FFG is forecast to exceed €1 billion in revenue and achieve an adjusted EBITDA margin above 20% in 2027.
• Growth remains uneven across businesses: Energy orders nearly tripled and defense and service revenue grew, but DEUTZ said engine demand has not recovered broadly. The company also cited lower operating cash flow from inventory buildup and severance payments, and identified up to 300 additional Cologne engine-unit positions that could be affected over two years.

DEUTZ Aktiengesellschaft ETR: DEZ reported higher orders, revenue and profit for the first nine months of 2026 and said it had closed its acquisition of defense company FFG earlier than expected.

The engine manufacturer expects its full-year adjusted EBIT margin to reach the upper end of its 6.5% to 8% guidance range, now that FFG will be included in its financial results for roughly two months. CEO Sebastian Schulte estimated FFG’s contribution to 2026 revenue at approximately €100 million, while cautioning that the figure could vary as the business moves to international accounting standards.

DEUTZ maintained its full-year revenue guidance of €2.3 billion to €2.5 billion and its forecast for free cash flow before acquisitions of a high double-digit million-euro amount.

Orders and earnings rise

Nine-month new orders rose 30% to nearly €2 billion, while revenue increased 11% to approximately €1.7 billion. Adjusted EBIT rose 36% to €118.2 million, giving the company a 7.1% margin, up 1.3 percentage points from the prior-year period.

CFO Oliver Neu said acquisitions contributed €155 million to the increase in orders. Excluding that first-time consolidation effect, orders still grew 20%. Acquisitions completed since the end of the third quarter of 2025 contributed slightly more than €100 million to revenue growth, Neu said.

Net income doubled to €40 million from €20 million a year earlier, despite a €13 million provision for a voluntary workforce program. Neu attributed the improvement in adjusted EBIT to acquisitions, efficiency programs and scale effects.

Operating cash flow fell to €55.8 million, primarily because DEUTZ built inventory for fourth-quarter deliveries and made severance payments. Net debt increased to €378 million.

FFG becomes defense anchor

DEUTZ said the FFG transaction carried consideration of nearly €1.6 billion in cash and shares, making it the largest acquisition in the company’s history. The deal had originally been expected to close in late 2026 or the first quarter of 2027.

FFG’s former owners now hold 29.9% of DEUTZ and are subject to an investor agreement that includes a two-year lockup and a one-year standstill, Schulte said. Two representatives of the former owners, Norbert Erichsen and Gorm Iver Gondesen, are to be appointed to the supervisory board.

FFG will anchor DEUTZ’s defense unit but remain largely independent operationally, retaining its management and workforce, Schulte said. DEUTZ expects FFG on a stand-alone basis to generate more than €1 billion in revenue and an adjusted EBITDA margin above 20% in 2027. Potential synergies are additional to that forecast.

Schulte said DEUTZ and FFG have full access to cash at FFG Industries, a subsidiary with a 45% local shareholder, although minority interests must be considered in profitability and distributions. Neu said pro forma leverage including FFG was below 2.5 times at the end of September, excluding leases, and should improve substantially by year-end. He noted that advance payments count as cash in the leverage calculation but can lead to future cash outflows.

Energy and defense expand as engine recovery remains uneven

DEUTZ Energy recorded €342 million in orders for the nine months, up almost 200% with help from acquisitions. Revenue reached €195 million, and adjusted EBITDA was €23 million. Schulte said the unit expects revenue above €300 million for the full year and reaffirmed an ambition to reach €1 billion within five years.

The energy unit’s Frerk business won a data center contract in October valued in the low double-digit millions of euros, Schulte said. The order will be reflected in fourth-quarter intake.

Before FFG’s contribution, defense revenue rose 52% to €83 million in the nine months, supported by engines for air-defense systems and wheeled vehicles, as well as electric drives for military drones. Service revenue increased 10% to €451 million, with third-quarter U.S. service revenue up 38%.

In engines, Schulte said orders from U.S. customers were improving, but the company had not seen a broad-based market recovery. DEUTZ completed a voluntary program that reduced around 100 positions at its Cologne site and identified up to 300 additional engine-unit positions there that could be affected over the next two years, depending in part on demand.

The smaller NewTech unit reported an adjusted EBITDA loss of €21.6 million for the nine months. Schulte said its main challenge was converting its project pipeline into revenue.

DEUTZ plans to provide 2027 guidance with its full-year 2026 results on March 30 and hold a capital markets day in the second quarter. Schulte said the company was likely to share more on its medium-term targets in early 2027.

About DEUTZ Aktiengesellschaft (ETR:DEZ)

DEUTZ Aktiengesellschaft develops, manufactures, and sells diesel and gas engines in Europe, the Middle East, Africa, the Asia Pacific, and the Americas. The company operates through Classic and Green segments. It offers hybrid, all-electric, and hydrogen drives, including mobile rapid charging stations and related services. In addition, the company provides compact engine systems and engine accessories. The company products are used in various applications, such as construction equipment, agricultural machinery, material handling equipment, stationary equipment, commercial vehicles, rail vehicles, and other applications.

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