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Slowly towards change: engine manufacturer Deutz is pushing farewell to diesel

2021-11-17T06:27:47.061Z


Many trucks, excavators and buses with climate-damaging Deutz diesel engines are still running. By 2031, the CEO wants to generate half of its sales with climate-friendly units - for the SDax group from Cologne that means a small revolution.


Enlarge image

New times for the 157-year-old group:

Deutz 'diesel drives are increasingly to be supplemented by hydrogen and electricity

Photo: Friso Gentsch / dpa / picture alliance

The Cologne engine manufacturer Deutz wants to increase the proportion of "green" drives by 2031 more than tenfold.

CEO

Frank Hiller

(55) confirmed this to manager magazin.

In ten years' time, drives that work with hydrogen or electricity instead of diesel should account for more than half of the Group's sales.

So far it is only 4 percent, or 60 million euros.

Hiller wants to achieve his goals through organic growth as well as through acquisitions.

In order to advance the business with new types of engines, the CEO is also restructuring the SDax Group and amalgamating the activities related to sustainable mobility in a new "Green" segment.

The new division should be profitable from 2027.

"The world of engines is changing rapidly and radically," said CEO Hiller to manager magazin.

"Who, if not Deutz, knows how to make engines better, more efficient and cleaner with new technologies."

With his group, he wants to "actively shape and promote" the transformation to green engines.

This is a "unique opportunity" for Deutz.

However, the massive expansion of alternative drive types also means a revolution for the corporate culture at Deutz.

Like many of its competitors, the engine manufacturer has so far mostly done everything itself.

Now it is increasingly a question of cooperation, admits Hiller.

Because Deutz will need expertise in several, sometimes very different, types of drive in the future.

The new group structure should also help with this.

The diesel business will also be strengthened

Since taking office in 2017, Hiller has been struggling to make the long-term low-income engine manufacturer fit and to expand the product range to include alternative drives. Because of the climate debate and the pressure on diesel fuel, customers are increasingly demanding "greener" units. To this end, the CEO took over the German electric motor manufacturer Torqeedo, which specializes in boat drives, and the battery cell manufacturer Futavis. In August, Deutz also presented the first hydrogen engine ready for series production. Hiller also recently invested 10 percent in the Danish fuel cell specialist Blue World Technologies, which could go public next year - primarily to secure exclusive sales and service rights.

Hiller strengthened its classic diesel engine business with a new joint venture in China and extensive partnerships with major customers such as the US agricultural machinery manufacturers John Deere and Agco and the Swiss construction machinery specialist Liebherr.

Sophie Albrecht, daughter of co-owner Willi Liebherr, even moved into the Deutz supervisory board in 2018.

Trouble with the new major shareholder

Large manufacturers of buses and trucks are also considering building and developing their engines for cooperation in the future.

The Deutz boss is likely to speculate on entering into further strategic partnerships here.

However, Hiller did not want to comment on this when asked.

Similar to the domestic car companies, Deutz needs the profits from the core business with diesel for years to be able to finance the conversion to alternative drives. However, Hiller expects the combustion engine to be used longer in construction or harvesting machines than in cars, for example, so that his company has more time to make the change.

So far, the company has mainly earned its money with diesel engines for construction machinery, ships, buses and trucks. In 2019, the year before the onset of the corona pandemic, Deutz sold 211,000 units and posted a turnover of over 1.8 billion euros. Last year it was more than a quarter less, and sales fell by almost 30 percent to 1.3 billion euros. For this year, CEO Hiller expects to sell up to 170,000 engines and thus increase sales again to around 1.7 billion euros.

Since this summer, Hiller, who before taking office in Cologne was a member of the board of the auto supplier Leoni (2014 to 2016) and of the commercial vehicle manufacturer MAN (2009 to 2013), has had to deal with a new major shareholder. The Amsterdam-based investment company Ardan Livvey bought Deutz with just under 4 percent. Ardan Livvey is said to be backed by the Bosnian entrepreneurial family Hastor with their conglomerate Prevent, which is said to have robust business practices. However, the company is said to refuse to disclose its financiers to the Deutz management; she also evasively answered a request from manager magazin. The new shareholder recently accused Hiller's Deutz management of "failure", mainly because Deutz's results lagged behind those of competitors such as Volvo.

Hiller had bad experiences with Prevent three years ago.

The group had taken over the supplier Halberg Guss, but then provoked it into a lengthy strike through excessive demands against customers such as Volkswagen and Deutz and finally maneuvered the company into bankruptcy.

Because of the crisis at Halberg Guss, Hiller had to partially stop production, Deutz lost a double-digit million amount.

Withdrawal in installments?

However, Ardan Livvey has already scaled back his involvement with Deutz: The company recently sold one million of its almost 5 million Deutz shares.

This means that the company is no longer - as it itself claimed this week - the fifth largest shareholder in Deutz, but only the tenth largest.

Founded in 1864, Deutz is one of the most traditional industrial groups in the country.

This is where Nicolaus August Otto (1832 to 1891) developed the four-stroke engine, and this is where Robert Bosch (1861 to 1942) got the idea for his spark plugs.

As Klöckner-Humboldt-Deutz (KHD), the group was a giant in the 1970s and 1980s.

The recently deceased ex-Deutsche Bank boss Hilmar Kopper once commanded the supervisory board.

Source: spiegel

All news articles on 2021-11-17

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