DEUTZ AG: New three-pillar growth strategy in China

Dow Jones received a payment from EQS/DGAP to publish this press release.

DGAP-Media / 2018-12-17 / 18:59 
 
*DEUTZ AG: New three-pillar growth strategy in China* 
 
*- *Joint venture with leading construction equipment group SANY 
 
- Expansion of service business with HORIZON 
 
- Manufacturing alliance with BEINEI 
 
- Revenue of half a billion euros expected in 2022 
 
Cologne/Beijing, 17 December 2018. DEUTZ AG is restructuring its market 
presence in China, entering into partnerships with three major Chinese 
companies - SANY, HORIZON and BEINEI - in order to benefit from the 
high-growth Chinese market. "China is the largest individual market for 
engines in the world," says Dr Frank Hiller, Chairman of the DEUTZ Board of 
Management. "Thanks to its new partners, DEUTZ now has the ideal production 
network for efficiently supplying local customers with DEUTZ drive systems. 
At the same time, we have access to an extensive service network that we 
will systematically enhance with digital solutions." 
 
DEUTZ and SANY, China's largest construction equipment group, signed a 
memorandum of understanding in Beijing. The two companies are forming a 
joint venture in which DEUTZ AG will be the majority shareholder with a 
stake of 51 per cent. Initially, the plan is to supply SANY with around 
75,000 new engines for off- and on-road applications in 2022. These engines 
will comply with the China 4 and China 6 emissions standards. One of the 
leading engine manufacturers in the off-highway segment, DEUTZ AG is thus 
stepping up its activities in the on-highway segment as well. DEUTZ AG's 
initial investment in the new joint venture is in the mid double-digit 
millions. 
"We chose DEUTZ because it is one of the world's top engine manufacturers," 
says Lincoln Liang, a member of the Sany Group's board of directors. "In 
this joint venture, we will benefit from working with an agile company that 
is looking to the future and driving forward technological innovation. DEUTZ 
thus brings to the table exactly what we need for our engine development." 
 
In addition, DEUTZ AG is entering into a cooperation agreement with HORIZON 
in order to strengthen its position in the attractive service business as 
well. With more than 80 branches, HORIZON is the largest player in the 
Chinese construction equipment rental business. It will become a local 
service partner for DEUTZ, servicing engines in the field and taking over 
the aftermarket sales business in China. HORIZON is also the ideal partner 
with regard to digital fleet service solutions. 
 
Another element of the new strategy for China is a local contract 
manufacturing alliance with engine manufacturer BEINEI. This will act as a 
production hub for the Asian market. The DEUTZ management team is to oversee 
the manufacturing of approximately 20,000 engines in 2022 at a new factory 
in Tianjin. 
 
In October 2018, DEUTZ AG sold its shares in DEUTZ Dalian, the Chinese joint 
venture that it had entered into with First Automotive Works (FAW). The new 
strategy now enables DEUTZ to fundamentally overhaul its market presence so 
that it can meet the growing demand for sophisticated engines not only in 
China but also in other Asian markets. On the back of its three pillar 
growth strategy, DEUTZ is aiming to generate revenue of around half a 
billion euros in China in 2022.[1] 
 
For further information on this DEUTZ AG press release, please contact: 
 
Leslie Isabelle Iltgen 
 
Senior Vice President Communications & Investor Relations 
 
Tel: [phone] 
Fax: [phone] 
Email: [e-mail] 
 
[1] Whether this revenue will be fully consolidated is still to be reviewed. 
 
End of Media Release 
 
Issuer: DEUTZ AG 
 
2018-12-17 Dissemination of a Press Release, transmitted by DGAP - a service 
of EQS Group AG. 
The issuer is solely responsible for the content of this announcement. 
 
The DGAP Distribution Services include Regulatory Announcements, 
Financial/Corporate News and Press Releases. 
Archive at www.dgap.de 
Language: English 
Company:  DEUTZ AG 
          Ottostraße 1 
          51149 Köln (Porz-Eil) 
          Germany 
Phone:    [phone] 
Fax:      [phone] 
E-mail:   [e-mail] 
Internet: www.deutz.com 
ISIN:     DE0006305006 
WKN:      630500 
Indices:  SDAX 
Listed:   Regulated Market in Dusseldorf, Frankfurt (Prime Standard); 
          Regulated Unofficial Market in Berlin, Hamburg, Hanover, Munich, 
          Stuttgart, Tradegate Exchange 
 
End of News DGAP Media 
 
759251 2018-12-17 
 
 

(END) Dow Jones Newswires

December 17, 2018 12:59 ET (17:59 GMT)