Market risk

We operate in sales markets that are characterised by particular sensitivity to cyclical influences. This can have a negative impact on the financial position and financial performance of the DEUTZ Group. As well as having a direct effect on unit sales and revenue, this may also impact negatively on the value of the assets on our balance sheet. We operate in very cyclical markets in our main application segments, Construction Equipment and Material Handling. Our objective is to continue to reduce this cyclicality from a regional and application segment perspective.

In the medium and long term, we seek to mitigate regional and application-related sales risks by aligning our development activities with our product strategy and by entering into alliances. Close alliances with our key customers are of considerable importance in enabling us to achieve these sales targets, although there is a risk of becoming dependent on them in the long term. We therefore pursue a strategy of signing up new customers and progressively expanding our business with them. These business development activities are focused on Asia and elsewhere.

We are very well diversified and well positioned for the future in terms of the geographical and sectoral distribution of our customers. We supply the market-leading manufacturers in the various application segments. Despite the countermeasures that are in place, we cannot completely control the external risks. In view of the measures in place, we categorise the market risk as ‘low’ in respect of the achievement of our corporate targets for 2019 because of the level of orders on hand. Still factoring in these measures, we assume a ‘medium’ level of risk in the medium term, however.

The United Kingdom’s upcoming departure from the European Union does not constitute a material market risk because our volume of business in the country is comparatively low.