DEUTZ AG

Investor Presentation • Jul 15, 2003

Analysts` meeting August 14th, 2002

I. DEUTZ Re-Launch

II. First half-year report 2002

III. Outlook 2002

Analysts` meeting August 14th, 2002

I. DEUTZ Re-Launch II. First half-year report 2002 III. Outlook 2002

Re-Launch / 5-Point Programme

Why Re-Launch?

X

• y10 years of poor performance
• yUnfocused, highly diversified business structure

C oncentration of production

structures

• uality offensive
• P romotion of co-operations

Re-Launch: Success in 2001

Jan. - June 2002

June 2002

• 1. Unprofitable engine families eliminated
• 1. Slow-selling variants / complexity reduced
• 1. Closing of foundry, completion in 2002
• 1. Non-core activities sold off (industrial plant and agriculture business)
• 1. Overhead reduced by 300 employees
• 1. Strict cost and investment management
• 1. Productivity improvement of 9.5 %
• 1. Sales / production co-operation agreements signed
• 1. Reduced legacy risks

Enhanced Re-Launch 2002

XLower Break-Even-Point

X

XDEUTZ will reduce staff by 1,000 vs. 12/2000 (nearly 500 realised in the overhead area)

Major restructuring projects fully on schedule:

• yClosing of foundry (completion in 2002)
• yReduction of manufacturing costs (ongoing)
• yFocusing of sales / service network world-wide (nearly completed)
• yGlobal company, with the speed and culture of a small company (initiated)

Enhanced Re-Launch 2002

X

X

Asset Management (fixed assets, inventories, trade payables)

XJune 2002 vs. June 2001: -80,6 mill €

XMaterials Management

• y Global Sourcing
• y Streamlining of logistic processes
• y Introduction of consignment stocks
• yLead-Supplier concept
• "Zero Stock Program"
• XOptimizing manufacturing structures

Jan. - June 2002 June 2002

;

;

;

Re-Launch: Targets in € mill.

Analysts` meeting August 14th, 2002

DEUTZ Re-Launch

II. First half-year report 2002

III. Outlook 2002

Jan. - June 2002 June 2002

I.

New Orders

J J a n u n e - € i l l i m o n	2 0 0 2	2 0 0 1	/ I D n c r. e c r.
G N d D E U T Z e w o r e r s r o u p	6 1 8 4	6 2 1. 2	2 8 -
S l l i m a e n g n e s	4 4 2 1	3 9 2 1	5 0 0
h f i t t e r e o : n e w e q u p m e n -	3 4 8 5	3 0 8 3	4 6 5
i s e r c e v -	8 7 3	8 3 8	3 5
M d i i d d l i e m s e a n a r g e e n g n e s u z -	1 7 6 3	2 2 9 1	5 2 8 -
h f i t t e r e o : n e w e q u p m e n -	8 0 4	1 4 0 4	6 0 0 -
i s e r c e v -	9 5 9	8 8 7	7 2

J J a n u n e . - € i l l i m o n	2 0 0 2	2 0 0 1	I / D n c r. e c r.
S l D E U T Z G a e s r o p u	4 9 5 5	9 8 5 7	4 3 8 -
S l l i m a e n g n e s	4 0 8 0	3 9 0 1	1 7. 9
f t h i t e r e o : n e w e q u p m e n -	3 2 4 1	3 0 9 5	1 4 6
i s e r v c e -	8 3. 9	8 0. 6	3 3
M d i i d d l i e m s e a n a r g e e n g n e s u z -	1 4 6 9	2 0 8 6	6 1. 7 -
h f i t t e r e o n e e q p m e n : w u -	5 6. 6	1 2 6. 2	6 9 6 -
i s e r v c e -	9 0. 3	8 2 4	7 9

Sales by region*

• Strong market position

• – Germany
• – Western Europe
• – North America
• – Near-/Middle-East, Africa
• • Good growth potential
  • – Asia, Australia
  • – China
  • – Eastern Europe

Regions

X

X

X

Small engines: +92% (S) half

>

of which due to co-

FAW

M+L-engines sales incr.

operation

100% (S)

China North America Small engines: stable on planned level M + L engines*: weak due to energy/telec. markets Service: growth/market position strengthened Germany X Sales incr. +7% (S) X Agricultural machinery growth X Construction machinery stable X Service: positive development Western Europe X Incr. of unit sales due to VOLVO X Small engines: +7% (S) X M+L engines: weak due to energy/telec. markets X Service: growth 11% (S) Eastern Europe X Small engines: +44% (S) X Co-operation BELAZ Near-/Middle-East, Africa X Small engines: Recovery Turkey (Gensets, Autom.) +48% (S) X Co-operation Uzel/Turkey X Recovery Algeria +42% (S) Asia/AustraliaX South Korea: Start of VOLVOco-operation for constuctionmachinery + € 7,1 mill.X Service: +14% (S)*M+L engines = medium-sizedand large enginesSouth America X Difficult economic situation

12

Jan. - June 2002 June 2002

X

X

Unit Sales worldwide

J J a n u n e - S U i t l n a e s	2 0 0 2	2 0 0 1	I / D n c r. e c r.
S l l i m a e n g n e s O f t t 4 t 4 4 0 k W u p u r a n g e r o m o	8 2 6 2 3 ,	8 0 1 5 5 ,	2 4 6 8 ,
h f i l / l d t t e r e o : o w a e r c o o e - -	6 1, 3 1 7	8 8 8 2 5 ,	2 8 4 9 ,
i l d a r c o o e - -	2 0 8 9 2 ,	2 1, 2 3 7	3 8 1 -
M d i i d d l i e m s e a n a r g e e n g n e s u z - O f 2 4 5 4 0 0 0 k W t t t u p u r a n g e r o m o ,	2 8 0	4 6 7	1 8 7 -

13

Key Figures

J J a n n e u - € i l l i m o n		2 0 0 2	2 0 0 1 *	I / D n c r. e c r.
S l a e s		5 5 4 9	5 9 8 7	4 3 8 -
E B I T D A	t h f f f b l e r e o o a a n c e	5 3 5	4 9 5 1 0. 4	4 0
E B I T	f f f t h b l e r e o o a a n c e	2 2 5	1 6 5 4. 8	6 0
f / P i t l d i r o o s s o n o r	t i i t i n a r y a c v e s	3 8	6 9 -	1 0 7
f / P i t l r o o s s		3 1	7 4 -	1 0 5

*excl. KHD Humboldt Wedag

Profit and Loss Account

J J a n. u n e -	2 0 0 2	2 0 0 1 / *	I / n c r.	2 0 0 1 *
€ i l l i m o n			D e c r.
S l a e s	5 5 4. 9	5 9 8. 7	4 3. 8 -	5 9 8. 7
I i f i i h d d d k i n c r. n n s e g o o s a n w o r n p r o c e s s, o w n k i t l i d o r c a p a s e w	2 5. 5	2 1. 4	4. 1	2 1. 4
T t l t t o a o u p u	5 8 0. 4	6 2 0. 1	3 9. 7 -	6 2 0. 1
C t f t i l o s o m a e r a s	3 1 3. 2 -	3 4 6. 1 -	3 2. 9	3 4 6. 1 -
P l e r s o n n e e x p e n s e s	1 4 5. 6 -	1 5 6. 9 -	1 1. 3	1 5 6. 9 -
D i i t e p r e c a o n	3 1. 0 -	3 3. 0 -	2. 0	2 2. 6 -
O h i i / t t e r o p e r a n g n c o m e e x p e n s e s	6 8. 1 -	6 7. 6 -	0. 5 -	8 2. 8 -
I t t t n e r e s e x p e n s e s, n e	1 8. 7 -	2 3. 4 -	4. 7	1 8. 6 -
f / P i t l d i t i i t i r o o s s o n o r n a r y a c v e s	3. 8	6. 9 -	1 0. 7	6. 9 -
T a e s x	0. 7 -	0. 5 -	0. 2 -	0. 5 -
P f i t / l f t h h l f r o o s s o r e a y e a r	3. 1	4 7. -	1 0. 5	4 7. -

*excl. KHD Humboldt Wedag, **Pro-Forma incl. on/off balance

15

Cost-run rate (in %)

Balance Sheet DEUTZ Group

A t s s e s € i l l i m o n	J 3 0, 2 0 0 2 u n e	D 3 1, 2 0 0 1 e c.	I / D n c r. e c r. J 3 0, 0 2 / u n e D 3 1, 0 1 e c.	J 3 0, 2 0 0 1 u n e P F r o- o r m a O / O f f n	I / D n c r. e c r. J 3 0, 0 2 / u n e J 3 0, 0 1 u n e
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 7. 9	1 5. 1	2. 8	1 2. 6	5. 3
I i b l d i b l t t t n a n g e a n a n g e a s s e s	4 5 9. 7	4 8 4. 6	2 4. 9 -	5 0 0. 2	4 0. 5 -
F i i l t n a n c a a s s e s	3 6. 4	3 6. 2	0. 2	4 7. 0	1 0. 6 -
( ) I t i t n e n o r e s n e v	2 9 5. 2	2 7 1. 4	2 3. 8	3 1 8. 7	2 3. 5 -
T d i b l r a e r e c e v a e s	2 0 0. 8	2 1 1. 1	1 0. 3 -	2 1 7. 4	1 6. 6 -
L i i d t q a s s e s u	1 6 7.	3 2. 0	1 4. 4 -	1 6. 0	1. 6
O t h t t i d e r c u r r e n a s s e s, p r e p a d d f d h e x p e n s e s a n e e r r e c a r g e s	7 9. 6	9 1. 8	1 2. 2 -	8 9. 7	1 0. 1 -
T t l o a	1, 1 0 7. 2	1, 1 4 2. 2	3 5. 0 -	1, 2 0 1. 6	9 4. 4 -

Balance Sheet

S `s t k h l d i t d l i b i l i t i o c o e r e q a n a e s u y	3 0, 2 0 0 2 J n e u	3 1, 2 0 0 1 D e c.	/ I D n c r. e c r.	3 0, 2 0 0 1 J n e u	/ I D n c r. e c r.
			/ J 3 0, 0 2 n e u	P F r o- o r m a	/ J 3 0, 0 2 n e u
€ i l l i m o n			D 3 1, 0 1 e c.	O / O f f n	J 3 0, 0 1 u n e
S k h l d `s i t t o c o e r e q u y	9 6. 1	9 3. 0	3. 1	1 1 6 7.	2 1. 5 -
C f f t i b l i t- t i i t i t i i t o n e r e p r o p a r c p a o n c e r c a e v	2 5. 6 s	2 5. 6		2 5. 6
P i i r o v s o n s	4 6 4. 3	4 8 8. 4	2 4. 1 -	4 1. 4 5	1 2. 9
A d d i i i i t t t t t t m o u n s o w e o c r e n s u o n s	3 8. 0 5	3 1. 7 7	1 3. 7 -	3 1. 6 7	1 3. 6 -
T d b l r a e p a y a e s	9 0. 0	8 2. 8	2 7.	9 0. 2	0. 2 -
O h b l d f d i t e r p a y a e s, e e r r e n c o m e	7 3. 2	8 0. 7	7. 5 -	1 4 5. 2	7 2. 0 -
L i b i l i t i a e s	5 2 1. 2	5 3 5. 2	1 4. 0 -	6 0 7. 0	8 5. 8 -
T l t o a	1, 1 0 2 7.	1, 1 4 2. 2	3 0 5. -	1, 2 0 1. 6	9 4. 4 -

Net Financial Debt

€ i l l i m o n	J 3 0 2 0 0 2 n e u ,	D 3 1, 2 0 0 1 e c	J 3 0 2 0 0 1 n e u ,
A t d t d i t i t i t t i m o n s o e o c r e n s o n s u w u	3 5 8 0	3 7 1 7	2 3 7 9
L i i d t q u a s s e s	1 7 6 -	3 2 0 -	1 6 0 -
O B l n a a n c e -	3 4 0 4	3 3 9 7	2 2 1 9
O C A N D R			8 8 8
O l d l i t t e a s n g c o n r a c s			2 7 5
O f f- B l a a n c e			1 1 6 3
f N t i i l d b t e n a n c a e	3 4 0 4	3 3 9 7	3 3 8 2

Cash Flow Statement

J J a n. u n e - € i l l i m o n	2 0 0 2	2 0 0 1
P f i / l t r o o s s	3. 1	7. 4 -
C f D i t i h i i i i i e p r e c a o n, a n g e n p e n s o n p r o v s o n s, g a n s r o m
f f d i l t b- i t d t h i d t s p o s a s o c o r p o r a e s u u n s a n o e r x e a s s e s	3 0. 4	2 2. 5
C h f l a s o w	3 3. 5	1 1 5.
C h f k i i l t a n g e o w o r n g c a p a	2 7. 5 -	2 3. 2 -
C h F l f l t i t i i t i a s o w r o m n o r m a o p e r a n g a c v e s	6. 0	8. 1 -
C f h F l i t i t i i t i a s o w r o m n v e s n g a c v e s	6. 7 -	1 6. 8 -
C h F l b f f i i l i i i t t a s o e o r e n a n c a a c e s w v	0. 7 -	2 4. 9 -

Key Figures

	J J a n u n e - 2 0 0 2	J J a n u n e - 2 0 0 1
P f i / l i % f l t r o o s s n o s a e s	0 6 %	1 2 % -
% f E B I T i l n o s a e s	% 4 1	% 2 8
P f i / l i % f i ( l b i ) t t r o o s s n o e q u y o n a n n u a a s s	6 6 %	1 2 2 % -
E i h a r n n g s p e r s a r e	€ 0 0 5	€ 0 1 2 -
R O C E ( l b i ) o n a n n u a a s s	4 % 5	3 0 %
2 1		J J 2 0 0 2 J 2 0 0 2 a n u n e u n e -

Highlights

Jan. - June 2002

June 2002

XSignificant increase of orders for small engines: +12.8%

XService business better market penetration Increase of new orders: +6.2%

X Decrease of costs of materials from 56% to 54% of total output

XPersonnel expenses: € –11.3 mill. in spite of increase of wages

XReduced interest expenses: € -4.7 mill.

• XSuccess of asset management:
  • zFixed assets: € –40,5 mill.
  • zInventories (net) € –23.5 mill.

zTrade payables (net): €-16.6 mill.

X Significant increase of cash flow before financing: from € –24.9 mill. to € –0.7 mill.

Analysts` meeting August 14th, 2002

I. DEUTZ Re-Launch

II. Half-Year Report 2002

III. Outlook 2002