Deutz shows positive signs, but shares slip after strong gains

By Paolo Laudani

(Reuters) -German engine maker Deutz reported on Thursday a slightly smaller than expected drop in adjusted operating profit and higher orders for 2024, though neither was enough to sustain a recent surge in its shares. 

The stock had leapt 57% this year on optimism it could benefit from a planned government spending boost in Europe's largest economy. But the shares, which have been particularly popular among small traders using online forums, were down around 15% at 1010 GMT.  

"It is just (a reaction to) the strong re-rating of previous weeks. But the strong outlook and the initial positive Q/Q turnaround in order intake is very promising and will support new higher share price levels," Hauck Aufhaeuser analyst Jorge González Sadornil said.

Deutz was one of the most traded stocks on Thursday on Tradegate, a platform popular with German retail investors, alongside bigger players like Rheinmetall and Hensoldt.

The company's order intake rose 4% to 1.8 billion euros ($1.96 billion), above analysts' consensus estimate of 1.7 billion euros, according to a company poll.

Adjusted earnings before interest and tax dropped 46% to 76.7 million euros amid a weak economic backdrop and lower production volumes at its diesel and gas engines business, but that was also slightly higher than expected.

Deutz forecast sales of 2.1-2.3 billion euros this financial year, broadly in line with analysts' average estimate of 2.1 billion euros, according to LSEG data.

However, the outlook doesn't take into account the potential impact of U.S. tariffs, the company added in a statement.

($1 = 0.9179 euros)

(Reporting by Paolo Laudani; additional reporting by Zuzanna Szymańska. Editing by Louise Heavens and Mark Potter)