DEUTZ AG Deep Dive CMD 2024 | Expanding Global Reach with CEODEUTZ AG CMD 2024: Key Takeaways
In this section of DEUTZ AG’s Capital Market Day, CEO Sebastian Schulte highlights the company's service business's impressive growth and future potential. With revenues surpassing €500 million in 2024, DEUTZ has set an ambitious target to reach €1 billion by 2030, leveraging its extensive global service network and exploring new opportunities.
Structure and Overview of Service BusinessSebastian begins by outlining the three core pillars of DEUTZ’s service business: spare parts, which contribute around 70% of service revenue; billable service hours, accounting for 8%; and engine exchange, making up 23%, where used engines are refurbished and resold. DEUTZ operates in over 130 countries through a vast network of 1,000 dealers and ensures that its engines receive comprehensive, reliable maintenance worldwide.
Growth Potential in Spare Parts and ServiceThe global market for DEUTZ spare parts is estimated at around €1.1 billion, yet DEUTZ currently captures only 30% of it. Sebastian sees significant potential to grow this share to 40% or more, driving strong revenue growth. Similarly, in the billable service hours segment, DEUTZ currently serves just 14% of an €11 billion market. Increasing this penetration by a single percentage point translates into €18 million of additional revenue, presenting a clear opportunity for DEUTZ.
Key Growth Strategies
Network ExpansionDEUTZ is focused on expanding its service centres, particularly in the US, with significant growth potential. The company is establishing DEUTZ Power Centers (DPCs) and mobile service units, which allow technicians to respond quickly to customer needs and reduce downtime. This initiative alone is expected to contribute €100 million in additional revenue by 2030.
Industrial Fleet ManagementDEUTZ is expanding beyond servicing its own engines, offering maintenance services for entire machine fleets, including non-DEUTZ equipment. Recent contracts with major OEMs in the material handling industry demonstrate the viability of this approach.
Digital Business ModelsDigitalization plays a key role in DEUTZ’s service strategy. The company is connecting more engines to its Fusion Hub for real-time data collection, enabling predictive maintenance. With over 10,000 engines connected, DEUTZ plans to double this number next year. The ability to anticipate maintenance needs and minimize downtime is expected to contribute €50 million to service revenues by 2030.
Mergers and AcquisitionsDEUTZ’s acquisition strategy is pivotal in achieving its €1 billion service revenue target. Recent acquisitions, such as Diesel Motor Nordics, Hor Shield, and a key partner in Poland, along with the Rolls-Royce Power Systems service business integration, are projected to add €200 million to service revenues.
ConclusionSebastian concludes by emphasizing the carefully crafted strategies and realistic goals guiding DEUTZ’s service business toward its €1 billion revenue target. Supported by innovative initiatives and a strong team, DEUTZ is well-positioned to achieve continued growth in the service sector.
▶️ Other videos:
Elevator Pitch: https://seat11a.com/investor-relations-elevator-pitch/
Company Presentation: https://seat11a.com/investor-relations-company-presentation/
Deep Dive Presentation: https://seat11a.com/investor-relations-deep-dive/
Financial Results Presentation: https://seat11a.com/investor-relations-financial-results/
ESG Presentation: https://seat11a.com/investor-relations-esg/
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# Digitalization in ServicesThe use of technology to improve maintenance services, including real-time data collection for predictive maintenance.
