Financial position

Financial management in the DEUTZ Group is one of the core functions of the Group, and DEUTZ AG holds responsibility for this function. The basic principles and objectives of financial management at DEUTZ AG are therefore largely the same as those of the Group, as is the funding of DEUTZ AG. In this regard, please refer to the relevant sections of this combined management report.

Overview of DEUTZ AG’s financial position

€ million      
  2018 2017 Change
Cash flow from operating activities 96.9 100.8 –3.9
Cash flow from investing activities –75.5 –29.0 –46.5
Cash flow from financing activities –33.7 –24.6 –9.1
Change in cash and cash equivalents –12.3 47.2 –59.5
Free cash flow 1) 20.2 70.1 –49.9
Cash and cash equivalents at 31 Dec 115.7 128.0 –12.3
1) Cash flow from operating and investing activities less net interest expense.  

Liquidity

Despite the increase in operating profit, cash flow from operating activities fell slightly owing, above all, to the sharper rise in working capital. The growth of working capital was primarily attributable to the larger volume of business. By contrast, net cash used for investing activities in 2018 was above the level reported in 2017 due, among other reasons, to the increase in payments related to capital spending on property, plant and equipment and on intangible assets. In 2017, the disposal of the land occupied by our former Cologne-Deutz site had also had a very favourable impact on cash flow from investing activities. The net cash used for financing activities in 2018 consisted of the repayment of loans and a dividend payment to shareholders of €18.1 million. The year-on-year increase was attributable, in particular, to the higher dividend payment, which had amounted to €8.5 million in 2017. Free cash flow decreased substantially, above all because of significantly higher net cash used for investing activities.

Capital expenditure

After deducting investment grants, DEUTZ AG’s capital expenditure in 2018 amounted to a total of €86.0 million (2017: €160.0 million). This was broken down into €49.3 million (2017: €32.6 million) on property, plant and equipment, €22.8 million (2017: €36.9 million) on intangible assets and €13.9 million (2017: €90.5 million) on investments. Additions to property, plant and equipment mainly related to a change in supplier, the relocation of the 2011 engine series from Cologne-Porz to Ulm and the new TCD 2.2 engine series. DEUTZ AG also invested in new and more efficient testing equipment as well as replacement machinery. Capital expenditure on intangible assets mainly related to the development of the new TCD 2.2 engine series and the adaptation of our engines to meet the new Stage V emissions standard for Europe. The additions to investments consisted primarily of a loan to the subsidiary DEUTZ Spain S.A., Zafra, Spain.