DEUTZ AG

Investor Presentation • Jul 17, 2003

08/07/2003 1

1. DEUTZ at a glance

2. DEUTZ Re-Launch / 5-Point Programme

3. Success in figures

1. Strategic targets

1. DEUTZ at a glance

2. DEUTZ Re-Launch / 5-Point Programme

3. Success in figures

1. Strategic targets

Pioneering Engine Technology

Full-Line Engine Specialist

Market Segments

Market Segments

08/07/2003 8

Sales 2001 by Regions

08/07/2003 9

Forward R & D

Diesel engine technology

• !DEUTZ EMRÆ, electronic speed governing system
• !DEUTZ MVSÆ , high pressure fuel injection system.

DEUTZ Common Rail

!Patented twin pump common rail system

Gas engine technology

!DEUTZ TEMÆ system

• !Combustion control
• !Cylinder selective ignition control
• !Monitoring

08/07/2003 11

!Specialised for renewable gases

!Truck engines that fulfil EURO 4/5 regulations

!the new engine governing concepts VTG and AGR

Emission / Noise Reductions

!Noise reduction technology

Patents

!More than 600 German, European and worldwide technical patents.

Low Cost Production

1. DEUTZ at a glance

2. DEUTZ Re-Launch / 5-Point Programme

1. Success in figures

2. Strategic targets

Re-Launch: 5-Point Programme

!Why Re-Launch?

• !10 years of poor performance
• !Unfocused, highly diversified business structure

TURN AROUND PROGRAMME!

• Focusing ocusing of the model range of the mod
• C oncentration of production
• L eaner structures

uality offensive

P romotion of co-operations

Re-Launch: Profit effect targets in Ä millions

08/07/2003 15

Re-Launch Successes

• !Focusing of the model range:
  • !Unprofitable engine ranges eliminated
  • !Slow-selling variants / complexity reduced "
  • !Reform of R & D (focussed on strategic goals) "
  • !New mid-term and long-term product strategy defined

"Concentration of production:

• !Productivity improvement of 9.5 %
• !Exit out of foundry business (decision taken / process started) "
• !Closing of foundry as of 10/02 (ahead of plan) Profit effect: 8 Mio. Ä p.a. (from 2003 on), Reduction of staff by 200 people
• !New mid-term and long-term production strategy defined
• !Global sourcing, lead supplier concept, re-negotiation of frame contracts Effects: 15 Mio. Ä in 2003, 30 Mio. Ä in 2004/05, Reduction of supplier base by 1/3rd
• !Streamlining of logistic process: reduction of possible movements >50%

"

"

"

(ongoing)

(ongoing)

" 2001

2001

2001

2002

• "2001
  • 2001

2002

Re-Launch Successes

08/07/2003 17

N i i i t t o n c o r e a c e s s v -	l d f f ( i d i l l d i l b i ) t t t o n s r a p a n a n a g r c r e s n e s s u u u u	" 2 0 0 1
O h d d d b v e r e a r e u c e	3 0 0 l e m p o y e e s	" 2 0 0 1
O h d d d b e r e a r e c e v u	0 0 l 7 e m p o e e s y	" 2 0 0 2
B i U i t t b u s n e s s n s e s a	l i h d d t t s e r e n e w e o p m a n a g e m e n ,	" 2 0 0 2
C l i d d / l d t t o n s o a e r e a e	i d d b 1 / 3 d c o m p a n e s r e u c e y r	" 2 0 0 2
S i l i f i d l d m p e s a e s a n	i k t e r c e n e o r v w	" 2 0 0 2
T t l t o a a s s e s :	Ä ( / / ) 1 5 0 M i 1 2 0 0 t 1 2 0 2 b l b o o c o m p a r a e a s e - ,	" 2 0 0 2
! T i b l t a n g e a s s e s :	6 0 M i Ä o -	" 2 0 0 2
! I i t n v e n o r e s :	4 3 M i Ä o -	" 2 0 0 2
! R i b l e c e v a e s :	2 0 Ä ( C 1 2 / 0 2 1 2 / 0 0 ) M i F d t o c o m p a r e o -	" 2 0 0 2
f I t d t i i n r o u c o n o c o n s	t t k n m e n s o c s	( ) i o n g o n g
C l i / R d i t o s n g e c o n u	f f i k t o r e g n s o c s	( i ) o n g o n g
D i R i b l t u r a o n e c e v a e	/ L i b i l i i t a e s	( ) i o n g o n g
		o y y s g o s

S R L h e a n c c c e s s e s u u -
\$ Q f f l i t i a o e n s e u y v :
F l i 1 0 i t ! o c u s o n r e v o v n g o p s s u e s	" 2 0 0 1
S i f l l i f P D P ( P d d l P ) t t t t ! r n g e n o o n g o r o c e e o p m e n r o c e s s w u v	" 2 0 0 1
Q l i d d b h 2 0 % t t t ! a c o s r e c e m o r e a n u y u y	" 2 0 0 2
% P i f i t t r o m o o n o c o o p e r a o n s : -
/ M k t i d t i t i t i t h U Z E L i d ! a r e n g p r o u c o n c o o p e r a o n a g r e e m e n w s g n e -	" 2 0 0 1
f T h l t t i t h F A W i d ! e c n o o g y r a n s e r a g r e e m e n w s g n e	" 2 0 0 2
& R d d i k e c e r s s u :
H b l d W d ( S d i C ) i f i i h d t t t t t ! m o e a g a o n r a c s m o s e m s n s e u u -	" 2 0 0 2
M j l i k i b i l d t t ! a o r e g a c r s s o n e n g n e s n e s s s e e y u	" 2 0 0 2
& R d i f b k i ! t t e u c o n o r e a e v e n p o n	" 2 0 0 2
= P d i i f f i b l f f l f i l l d ! t t t r e c o n o n s o r p r o a e r e e u u u

08/07/2003 18

1. DEUTZ at a glance 2. DEUTZ Re-Launch / 5-Point Programme 3. Success in figures

1. Strategic targets

P & L DEUTZ Group per Sep. 2002

08/07/2003 20

	1 9 / 2 0 0 2 - Ä i l l i	1 9 / 2 0 0 1 - Ä i l l i	C h a n g e Ä i l l i
S l a e s	m o n 8 4 2 5	m o n 8 3 6 7	m o n 2 8 4 -
E B I T D A	4 7 7	6 3 9	1 3 5
E B I T	3 0 7	1 4 7	1 6 0
f / P i t L r o o s s	2 1	1 9 7 -	2 1 8

	s	s
	t, S 3 0 2 0 0 2 e p	t, S 3 0 2 0 0 1 e p	C h a n g e
	Ä i l l i m o n	Ä i l l i m o n	Ä i l l i m o n
B i i u s n e s s e x p a n s o n e x p e n s e s	1 9 3	1 4 6	4 7
F i d t x e a s s e s	4 8 6 1	0 9 2 5	2 3 1 -
C t t u r r e n a s s e s	8 8 5 5	8 5 7 5	1 0 0
f ( ) T h I t i t e r e o n e n o r e s n e v	2 9 4 0	3 0 8 4	1 4 4 -
f T h T d i b l e r e o r a e r e c e a e s v	1 9 9 7	1 8 4 8	1 4 9
T t l t o a a s s e s	1 0 9 3 9 ,	1 1 0 2 3 ,	8 4 -
S k h l d ís i t t o c o e r e q u y	9 1 5	1 0 3 5	1 0 2 -
C i b l f i i i i i f i t t- t t t t o n v e r e p r o p a r c p a o n c e r c a e s	2 6 5	2 6 5	0 0
P i i r o v s o n s	4 8 6 7	4 1 5 7	2 6 9
f f T h P i i P i e r e o r o s o n s o r e n s o n s v	2 9 9 5	3 0 3 3	3 8 -
A b l t c c o u n s p a y a e	4 9 4 6	1 9 5 7	2 1 5 -
f T h A t d t b k e r e o m o u n s o w e o a n s	3 3 7 9	3 6 4 2	2 6 3 -
T t l l i b i l i t i o a a e s	1 0 9 3 9 ,	1 1 0 2 3 ,	8 4 -

Cash Flow Statement per Sep. 2002

1 9 / 2 0 0 2 1 9 / 2 0 0 1 - - Ä Ä i l l i i l l i m o n m o n P f i / L f h i d 2 1 1 9 t t 7 r o o s s o e p e r o - C h f l 4 8 0 2 8 4 a s o w C f f 2 2 0 1 h l l t i t i i t i 4 4 a s o w r o m n o r m a o p e r a n g a c v e s C f f 1 2 6 1 6 2 h l i t i t i i t i 5 a s o w r o m n v e s n g a c v e s - - T h f f i i f f b l 1 3 5 4 t t t e r e o o u o r e- n e g r a o n o a a n c e - C h f l f f i i l i i i 3 3 8 1 4 9 0 t t a s o r o m n a n c a a c e s w v - T h f f i i f f b l 9 6 3 t t t e r e o o o r e- n e g r a o n o a a n c e u C h i l i i d f d 2 2 0 3 9 a n g e n q u u n s -

EBIT Improvement

E B I T	A t l c a u Ä M i l l i o n	R t e c e n Ä M i l l i o n	C h a n g e Ä M i l l i o n
/ F l l 2 0 0 1 2 0 0 0 e a r u y	2 7 9	1 5 6	1 2 3
F i 2 0 0 2 / 2 0 0 1 t t r s q a r e r u	7 4	0 5 ,	6 9
F i h l f 2 0 0 2 / 2 0 0 1 t r s a e a r y	2 2 5	1 6 5	6 0
F i i h 2 0 0 2 / 2 0 0 t t r s n n e m o n	1 3 0 7	1 4 7	1 6 0
F C 2 0 0 2 / 2 0 0 1	4 2 0	2 9 7	1 4 1
C h 2 0 0 2 2 0 0 0 t a n g e o			2 6 4

Improvement on Result of Ordinary Activities

R l t d i t i i t i e s u o n o r n a r y a c v e s	A t l c u a	R t e c e n	C h a n g e
	Ä M i l l i o n	Ä M i l l i o n	Ä M i l l i o n
F l l 2 0 0 1 / 2 0 0 0 u y e a r	1 3 7 -	2 4 5 -	1 1 7
/ F i t t 2 0 0 2 2 0 0 1 r s q u a r e r	1 5 -	1 1 2 -	9 7
f / F i t h l 2 0 0 2 2 0 0 1 r s a e a r y	3 8	6 9 -	1 0 7
/ F i t i t h 2 0 0 2 2 0 0 1 r s n n e m o n	3 1	2 1 0 -	2 4 1
F t 2 0 0 2 / 2 0 0 1 o r e c a s	4 4	1 3 7 -	1 8 1
C h 2 0 0 2 2 0 0 0 t a n g e o			2 9 8

Cash flow & Net financial debt

Key Figures 2001 / 2002

	A t l 2 0 0 1 c a u	F t 2 0 0 2 o r e c a s
f ( 3 1 t ) N b l D s u m e r o e m p o y e e s e c	9 9 5 7 ,	6 5 5 4 ,
U i l t n s a e s	1 4 6 6 4 5 ,	1 5 2 9 8 9 ,
T h f l l i e r e o s m a e n g n e s	1 4 5 5 3 8 ,	1 5 2 1 9 9 ,
T h f d i d l i e r e o m e u m a n a r g e e n g n e s	1, 1 0 7	7 9 9
	Ä M i l l i o n	Ä M i l l i o n
S l a e s	1 1 8 4 9 ,	1 1 5 8 1 ,
N d e w o r e r s	1 1 3 3 9 ,	1 1 6 6 9 ,
f E i b i t t, t d i t i a r n n g s e o r e n e r e s a e s e p r e c a o n x , d i i ( E B I T D A ) t t a n a m o r s a o n	8 9 1	1 0 0 1
O f ( ) t i i t E B I T p e r a n g p r o	2 7 9	4 1 9
I t t t n e r e s e x p e n s e n e ,	4 1 6 -	3 7 5 -
f / P i t l d i t i i t i r o o s s o n o r n a r a c e s y v	1 3 7 -	4 4
P f i / l t r o o s s	3 1 8 -	1 9

Shareholder Structure

08/07/2003 27

Share Price Development 12/2001 ñ 11/2002

1. DEUTZ at a glance 2. DEUTZ Re-Launch / 5-Point Programme 3. Success in figures

1. Strategic targets #### Starting Point

!ÑDEUTZ has a relatively strong strategic position...ì

M k t a r e		T k r c s u		A i g r	C o n	I d n	t s r u y		G t e n e r a o r			M i a r n e
p r e s e n c e * k = w e a ) d i = m e u m ( t = s r o n g	l i h t g	d. m e	h e a v y	l t c u u r e	t s r u c t i / o n M i i n n g	M b i l o	S i t t a o n a r y	S l l m a E n g.	d. m e E n g.	l a r g e E n g.	S l l m a E n g.	M d. e E n g.	2- S t k r o e E n g.
D E U T Z		*	)	(	(	(	(	(	)		*	)
C t i l l a e r p a r	)	(	(	(	(	(	(	*	(	(	(	(	*
C i m m n s u	(	(	(	*	(	*	(		(	*		(
C / / C D X M T U D D	(	(	(	*	*			(	(	*		(
D e e r e				(	(		*	*	(
M A N		(	(	*	*	*	)		*	(		(	(
‰ ‰ W t i l r s							*	*	(	(	*	(	(
N i t a v s a r	)	(	(	*	*						*
V l o o v		*	(		)		*	*	*		(	(

Source: J.P. Morgan

S l l, L i i d C l d m a q o o e u E i n g n e s 1 0 0 0 0 U i 5 t n s	S l l, A i C l d m a r o o e E i n g n e s 0 0 0 0 U i 5 t n s	M d i d L e m a n a r g e u - E i n g n e s 2 0 0 0 U i t n s
! G h i h V O L V O C t t r o o w w - t i o p e r a o n ! P h l b l i u s g o a s o u r c n g O O ( V L V / R V I ) ! C i f P d i d t t t o n c e n r a o n o r o u c o n a n A b l s s e m y ! I d F I E D E U T Z C R t n r o u c e n e w ! E l D E U T Z t n a r g e c o m p e e n c e S l i P i d ì t o u o n r o v e r Ñ	! S d- l t t t a n a o n e s r a e g y ! S l f E t E a e s o c u s a s e r n u r o p e , C h i d U S A n a a n ! F t h d l t 9 1 4 9 1 5 # u r e r e v e o p m e n ( S I I I ) t e p ! C t t i f P d t i d o n c e n r a o n o r o u c o n a n A b l s s e m y	! C F i d i t P t n a p p r o p r a e o- o p a r n e r - ! C t i l t t i f o n s e q u e n m p e m e n a o n o l t t t i p a n r e s r u c u r n g p r o g r a m m e ! D l 6 1 6 / 6 2 0 C e v e o p o m m o n- R i l a ! P h l b l i u s g o a s o u r c n g ! F t h l i t i t u r e r q u a y m p r o v e m e n s ! S l f E N E R G Y / O E M a e s o c u s

SERVICE

• !Central Warehousing: Europe (Cologne), NAFTA (Atlanta), China(Peking), Asia / Pacific(Singapore), Middle East / Africa(Istanbul) ñ 50% Reduction of Inventory
• !Increase sales efforts on OEMs and end customers ÑPull-Throughì
• !Develop eBusiness-activities
• !Extend product offering: Xchange programme all DEUTZ engines, O&M contracts, Remote Diagnostics

Market Strategy

S t e g m e n	C M i i t t a n o m p e o r s	P i i T d t o s o n o a y	T P i i t t a r g e o s o n
M b i l o e E i t q u p m e n	! K b Y t o a a n m a r, u , P k i J h D e r n s o n e e r e , , C i C t i l l u m m n s a e r p a r ,	! N 1 @ 3 0ñ 6 0 k W o ! N 3 6 0 k W > o	! N 1 i h t o n e n o n t i M k t c a p v e a r e
S i t t a o n a r y E i t q p m e n u	! P k i C i e r n s u m m n s , , C i l l M T U / D D C t a e r p a r, , J b h W k h e n a c e r, a u e s a	! N 1 i G o n e r m a n y ! N 2 i W E t o n e s e r n r o p e u f d M i d d l E t, A i a n e a s r c a	! N 1 i G o n e r m a n y , W E d t e s e r n r o p e a n u f M i d d l E t, A i e a s r c a ! G t t i i t t h e n g n o e A i k t m e r c a n m a r e
A i l t g r c r e u u	! P k i V M V l t, e r n s a m e , , J h D o n e e r e	! N 2 @ 6 0 2 0 0 k W o - ! U i S l l i P i t n q u e e n g o n : i l d i a r- c o o e e n g n e s	! N 2 @ 6 0 2 0 k W 7 o - ! E i b l 6 0 k W x p a n s o n e o w
M i a r n e	! Y C i l l t a n m a r, a e r p a r, M T U M A N ,	! S f i l i t N M p e c a s o r a v y e g a , Y h t T d F i h a c s u g s a n s e r y , B t o a s ! N i h l i f h t c e s p p e r o r o e r u l i t i a p p c a o n s	! R i f h b- t t e -e n e r n g o e s u t F t F i s e g m e n s a s e r r e s d H i h S d Y h t a n g p e e a c s

Product Strategy

T t a r g e s	! M t i i i t e e e m s s o n r e q r e m e n s u
	! M t i k t i t e e m o n g m a r e r e q r e m e n s v u
	! C f l l l i d t t r e a e n e p r o c r a n g e u u
	! R d i h l f t t t t e u c e c o s s w p a o r m c o n c e p s
M j S t a o r e p s	! I d i T I E R / S T A G E I I 2 0 0 1 2 0 0 6 t t n r o u c o n -
	! F l l l i l l l l d i f T I E R / S T A G E I I I 2 0 0 6- 2 0 1 0 t t u y e e c r o n c a y c o n r o e e n g n e s o r
	! C t i & f f i i i t f & l i o n n u o u s p o w e r e c e n c y m p r o v e m e n s o m e n g n e s
	! f % R d t i b i t b t h 5 0 t i l 2 0 1 0 e c o n o a s c p e s m o r e a n n u y y u

!Highlights Highlights

!The new air-cooled TIER/STAGE II Engines

!The new patented DEUTZ Common-Rail-System

!The new 20-Cylinder Gas Engine with Best-in-Class Efficiency of 44 %

!The new air-cooled Power Packs

DEUTZ is an excellent Investment

• !Outstanding Brand Name
  • !Global, high recognition, stands for quality
• !Leading Edge Technology
  • !DEUTZ Common Rail, low noise, extremely efficient
  • !Leader in applying renewable energy sources (Gas)
  • !Air cooled engines
• !Market Leader

!

• !Global reach, JVës in emerging markets
• !Key segments: Construction, Automotive, Power Generation
• !DEUTZ Re-Launch: 5-Point Programme
  • 80 % EBIT improvement in first year
  • !Positive Result achieved already in April 2002
  • !Break even in 2002
• !DEUTZ is well positioned to capitalise on positive world economic outlook and growth