Financial position

Overview of DEUTZ AG’s financial position
  2017 2016
€ million    
Cash flow from operating activities 100.8 50.7
Cash flow from investing activities –29.0 –44.5
Cash flow from financing activities –24.6 –23.1
Change in cash and cash equivalents 47.2 –16.9
Free cash flow 70.1 6.0
Cash and cash equivalents at 31 Dec 128.0 80.8
 
Free cash flow: cash flow from operating and investing activities less net interest expense.

Financial management in the DEUTZ Group is one of the core functions of the Group, and DEUTZ AG holds responsibility for this function. The basic principles and objectives of financial management at DEUTZ AG are therefore largely the same as those of the Group, as is the funding of DEUTZ AG. In this regard, please refer to the relevant sections of this combined management report.

Liquidity

Cash flow from operating activities amounted to €100.8 million last year (2016: €50.7 million). This rise of €48.6 million was predominantly due to the larger operating profit and the decline in other receivables. There had been a fairly sharp rise in other receivables in 2016, but they were mostly settled in 2017.

The cash flow from investing activities in 2017 was minus €29.0 million (2016: minus €44.5 million). Besides increased capital expenditure on intangible assets owing to the purchase of distribution and service rights from Liebherr Machines Bulle S.A., the main influences on net cash used for investing activities were as follows. Firstly, we sold the land occupied by our former Cologne-Deutz site. Secondly, DEUTZ AG acquired 100 per cent of the voting shares in both Torqeedo GmbH, Gilching, and DEUTZ Italy S.r.l., Milan (formerly IML Motori S.r.l.).

Cash flow used for financing activities in 2016 totalled €24.6 million (2016: €23.1 million). The net cash outflow in 2017 consisted mainly of the repayment of loans and a dividend payment to shareholders of €8.5 million.

Free cash flow increased year on year, rising by €64.1 million to €70.1 million (2016: €6.0 million). This was due, above all, to the significant rise in cash flow from operating activities.

Capital expenditure

After deducting investment grants, DEUTZ AG’s capital expenditure in 2017 amounted to a total of €160.0 million (2016: €52.1 million). The bulk of this spending (€90.5 million) went on investments (2016: €0.7 million). On 1 October 2017, 100 per cent of the voting shares were acquired in both Torqeedo GmbH, Gilching, and IML Motori S.r.l., Milan, Italy. Of the total capital expenditure (including acquisition-related costs), €79.0 million related to Torqeedo GmbH and €11.5 million to IML Motori S.r.l.

Capital expenditure on property, plant and equipment amounted to €32.6 million (2016: €41.2 million). Additions to these assets were mainly in connection with replacement investment in tools, equipment and machinery. The additions also related to the new TCD 2.2 engine series and the final measures to optimise our network of sites. In the first half of 2017, we also made the final capital investment in connection with stage two of the relocation of the exchange engine plant from Übersee to Ulm and with the construction of the shaft centre in Cologne-Porz.

Capital expenditure on intangible assets went mainly on the development of our new engines and the refinement of existing ones. Another major investing activity was the purchase of distribution and service rights as part of a cooperation agreement with Liebherr Machines Bulle S.A.