DEUTZ Aktiengesellschaft (ETR:DEZ) reported full-year 2025 results that management characterized as “profitable growth without the support of our core markets,” highlighting a sharper business mix and progress in newer business areas alongside continued weakness in traditional engine demand.
CEO Sebastian Schulte said DEUTZ increased new orders nearly 14% year over year to almost €2.1 billion, while revenue rose 12.7% to €2.044 billion. Adjusted EBIT margin improved to 5.5%, up 1.3 percentage points from the prior year, supported by “margin accretive M&A” and the company’s cost-reduction program. Free cash flow before M&A climbed to €44.2 million, nearly 50% higher than the prior year, driven largely by a strong fourth quarter.
2025 performance: growth despite lower engine volumes
Schulte acknowledged that engine volumes continued to decline as industrial activity, particularly in construction equipment and agriculture, failed to provide a recovery. DEUTZ reported 133,000 engine unit sales in 2025, down from 142,000 the prior year and well below levels seen earlier in the cycle.
In revenue mix terms, Schulte said the engine business accounted for 64% of group revenue in 2025, while the service business represented “a bit above 25%.” He highlighted the growing relevance of the energy business and noted the defense business has also begun to contribute more meaningfully.
CFO Oliver Neu said DEUTZ met its 2025 guidance across key metrics, including revenue of roughly €2.1 billion, adjusted EBIT margin of 5.5%, and “mid-double digit” free cash flow before M&A, which came in at €44.2 million. The order backlog stood at roughly €500 million, and Neu noted book-to-bill remained above one for the year, a trend he said appeared to be continuing in the current quarter.
Cost reductions and quarterly momentum
Neu provided an update on the company’s “Future Fit” program, which targets €55 million of structural cost reduction in 2026 versus a 2024 baseline. He said more than €25 million of savings are already fully P&L effective, with the remaining savings expected to ramp through 2026. DEUTZ booked €25 million of Future Fit-related costs in the first quarter of 2025.
Fourth-quarter performance stood out in management’s commentary. Neu said Q4 delivered the strongest quarter of the year, including an adjusted EBIT margin of 6.8%, helped by increasing Future Fit savings, higher engine sales volume of roughly €35 million versus earlier quarters, and contributions from acquisitions that took effect during the year.
On working capital, Neu said the ratio improved in 2025 and management is targeting “more towards the 15%” level in the midterm, while cautioning that differing business models across business units can affect the ratio over time.
Business units: defense, energy, engines, NewTech, and service
DEUTZ reorganized into five business units effective January 1, 2026, with P&L responsibility assigned to unit leaders. Management said the new reporting logic will begin with Q1 2026 results, replacing the historical segmentation.
- Defense: Schulte said defense exceeded the company’s expectations in 2025, citing strong momentum and steps into “DefTech.” DEUTZ acquired SOBEK, formed partnerships including with ARX Robotics for unmanned ground vehicle systems, and secured and executed first direct orders. Schulte reiterated a 2030 revenue ambition of €300 million for the defense business. In the Q&A, management described defense as a distinct go-to-market requiring dedicated resources and longer adoption cycles, but with higher margins per unit than industrial applications.
- Energy: Schulte called energy a 2025 highlight. He said Blue Star Power Systems in the U.S. delivered above-plan growth and profitability, while the company’s Moroccan asset is undergoing a turnaround with early signs of improving order intake in 2026. DEUTZ also signed the acquisition of FRAC in December 2025 and closed it in early February 2026, positioning it as a European presence in emergency power supply for data centers. Management reiterated an energy revenue target of €500 million by 2030, describing it as about 20% CAGR.
- Engines: Management said end markets remained challenging in 2025, particularly in Europe and the U.S., though DEUTZ launched a new 3.9–4.0 liter engine with what Schulte described as “extremely promising” customer response. DEUTZ also integrated Daimler Truck’s off-highway engine portfolio (HDEP and MDEP) into its sales and service offering and emphasized the strategic importance of expanding into higher power ranges, including plans to add a 24-liter V12 partner engine with initial orders from power generation customers. Schulte said the company started 2026 with improving order momentum in both Europe and the U.S.
- NewTech: DEUTZ acquired UMS in the Netherlands, began integration, and moved from one-off projects to small series production. Neu said NewTech generated €14 million in revenue in 2025 and posted a €34 million loss, similar to 2024, while R&D expenses declined as part of Future Fit. In the Q&A, management said it could “stretch projects” to reduce losses if needed but emphasized the “option value” of maintaining capabilities ahead of broader market adoption.
- Service: Schulte said the service business continued its growth trend, expanding the network, integrating the Daimler Truck engines into the service portfolio, and completing acquisitions in Turkey and the United States. Neu reported service revenue of €545 million, up 9% year over year, supported by acquisitions such as On-Site Diesel Service and the acquired Daimler Truck service business. In the Q&A, management described service growth levers including parts, more “work at the machine,” digital offerings such as telematics, and additional small dealership acquisitions.
Guidance: higher revenue and margin expected in 2026
For 2026, management guided to revenue of €2.3 billion to €2.5 billion and an adjusted EBIT margin of 6.5% to 8%. DEUTZ also expects “high double-digit million” free cash flow before M&A.
Schulte said the outlook reflects improving end markets and the full-year impact of acquisitions completed in 2025, as well as the near full-year contribution from FRAC following its February 2026 closing. He added that order intake in engines in early 2026 has been encouraging, though DEUTZ is maintaining a cautious stance given geopolitical uncertainty and the sensitivity of engine profitability to volume swings.
Neu said the company remains committed to its long-term ambitions, including an overall 2030 adjusted EBIT margin target of 10%, noting that service and energy are expected to be margin accretive, while engines are expected to be below 10% but “also not at zero.”
Capital allocation, leverage, and dividend proposal
Neu reported a 51.3% equity ratio and leverage of 1.3 including leasing (slightly below 1 excluding leasing). He said the balance sheet leaves DEUTZ with “strong financial firepower” for further acquisitions. In the Q&A, management indicated it could support higher leverage as the business becomes more resilient, with Neu saying he could “easily imagine a leverage of 2” and Schulte suggesting “2.5” could be possible depending on business development.
DEUTZ proposed a dividend of €0.18 per share, subject to approval at its Annual General Meeting scheduled for May 13.
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.
