MTU Aero Engines reports full year results

Lauren Eldershaw
By Lauren Eldershaw February 20, 2019 15:13

MTU Aero Engines reports full year results

MTU Aero Engines has posted a 17% increase in revenue to €4,567.1 million. The group’s operating profit  reached a new record level of €671.4 million. Net income  grew by 18 % to € 479.1 million.

“MTU Aero Engines AG continued to drive profitable growth in 2018. By not only achieving our target figures, but even slightly surpassing them, we reliably met our commitments to the capital market,” said Reiner Winkler, CEO of MTU Aero Engines.

MTU revised its earnings forecasts upwards twice in the course of the year, for the second time in October, targeting revenues of around €4.4 billion in 2018. The earnings forecasts were for an EBIT adjusted of approximately €660 million and net income adjusted of approximately €470 million in 2018. “We successfully strengthened our already good market position in both of our operating segments – OEM and MRO – in 2018, thus establishing a basis for future growth. In 2019, we are aiming at new record figures,” said Winkler.

MTU expects to generate revenues of around € 4.7 billion in 2019. “All business units are geared for growth,” added CFO Peter Kameritsch.

In 2019, the commercial series production business looks set to become the fastest growing segment with an organic revenue increase in the low teens. Revenue growth in the mid- to high-single-digit percentage range is projected for the spare parts business in 2019, while revenues in the military engine business are expected to grow by 10 %. MTU’s revenue forecast for its commercial maintenance business is for an organic growth rate in the high-single-digit percentage range. MTU expects its EBIT margin adjusted to reach around 15.5 % in 2019. Operating profit and net income adjusted are expected to increase in equal measure.

In the financial year 2018, revenues increased in both the commercial engine business and the commercial maintenance business.

Revenues in the commercial engine business grew by 24 % to €1,602.8 million. The major part of these revenues was attributable to the V2500 engine for the classic A320 family as well as the PW1100G-JM for the A320neo and the GEnx engine that powers the Boeing 787 and 747-8.

In the commercial maintenance business, revenues rose by 23% from € 2,285.3 million to € 2,799.8 million. This growth was driven by the V2500 engine and the CF34 family of regional and business jet engines.

Revenues in the military engine business decreased by 3 % from € 444.9 million to € 431.3 million. The main source of these revenues was the EJ200 Eurofighter engine. “In the military engine business we see potential above all in an engine for a next-generation European fighter jet. MTU is preparing intensively for a participation in the new engine program,” added Winkler.

At €17.6 billion, MTU’s order backlog in 2018 was 18 % higher than the previous year’s level of €15.0 billion. “This, too, sets a new record. In purely mathematical terms, this translates into a capacity utilisation of roughly four years, once again underscoring MTU’s excellent prospects,” commented Kameritsch.

The increase in earnings in the financial year 2018 was mainly attributable to the significant growth in EBIT adjusted in the commercial maintenance business of 23 % to €239.7 million compared to €194.4 million in 2017. The EBIT margin stood at 8.6 % compared with 8.5 % in the previous year. “To enable us to continue to participate in the growth of the MRO market moving forward, we are continuously optimizing our product and services portfolio and significantly expanding our capacities – for example with EME Aero, our 50:50 joint venture with Lufthansa Technik and the world’s largest and most advanced MRO shop for Geared Turbofan engines,” added Winkler.

Earnings in the OEM segment grew by 14 % to €431.4 million (2017: € 378.1 million). “Thus, despite almost doubling the number of GTF deliveries in partnership with Pratt & Whitney in 2018, the margin remained at a high level,” said Winkler. The EBIT margin adjusted for the OEM segment came to 21.2 % in 2018 compared with 21.8 % in 2017.

MTU Aero Engine has proposed a dividend of €2.85 per share for the financial year 2018.

Lauren Eldershaw
By Lauren Eldershaw February 20, 2019 15:13