Strategic risk

Based on our objective of broadening our customer and product base, our new strategy focuses on continued globalisation and the electrification of our existing product range. Under our three-pillar growth strategy, we will strengthen our engine and service business in China through our planned alliances with SANY, BEINEI and HORIZON. In particular, these will open up opportunities and potential for growth resulting from new customer relationships, production facilities and service partners. However, any investment always entails risks. The target market might not grow as anticipated and there could be delays and additional costs when projects are implemented. Under our E-DEUTZ strategy, we are adding electric and hybrid drive systems to the existing technology portfolio. This strategy presents the DEUTZ Group with numerous opportunities but is, of course, also associated with risks. These markets might not grow as anticipated either, while new product developments may not be as well received by customers as predicted or may not be able to compete with rival products.

We attempt to mitigate these risks by precisely analysing trends in our markets and by taking into account external market research. We also enter into close alliances with our major customers in the target markets. Our partners under our three-pillar growth strategy for China are market leaders. In September 2017, we acquired the electric drive specialist Torqeedo in order to accelerate the implementation of the E-DEUTZ strategy. Finally, we closely monitor our strategic projects so that we are able to respond immediately to changes.

In view of the measures in place, we categorise the strategic risks with regard to the attainment of our financial targets as ‘low’ in 2019 and as ‘moderate’ in the medium term.