IR-News details

• Guidance for full-year revenues increased to around €4,600 million
• EBIT expected to grow to around €430 million, net income to around €295 million

Munich, July 23, 2015—MTU Aero Engines AG saw its first-half-year revenues rise by 21% to €2,202.0 million in 2015 (1-6/14: €1,815.8 million). The group’s operating profit¹grew by 25% to €212.8 million (1-6/14: €170.7 million), while the EBIT margin increased from 9.4% to 9.7%. Earnings after tax² climbed 33% to €147.2 million (1-6/14: €111.0 million).

“The continuing strength of the U.S. dollar has boosted our revenues and earnings these past six months, throughout all business segments. These results have allowed us to revise our full-year forecast in the expectation of setting new records once again in 2015,” said Reiner Winkler, CEO of MTU Aero Engines AG. MTU now foresees revenues of around €4,600 million for 2015, instead of the €4,400 million predicted at the beginning of the year (2014: €3,913.9 million). Adjusted EBIT is expected to rise to around €430 million (2014: €382.7 million) and adjusted net income to around €295 million (2014: €253.3 million). The corresponding amounts in MTU’s original outlook were €420 million for adjusted EBIT and €285 million for adjusted net income.

The new guidance is based on an exchange rate of U.S. $1.10 to the euro (previously U.S. $1.20 to the euro). “The modified outlook reflects the positive impact on earnings of the U.S. dollar exchange rate and lower R&D expenses. Our forecast takes into account the extended maintenance intervals for the V2500 engine and postponements in the military sector, which will reduce our 2015 earnings expectation but will later increase our earnings potential. As a further consequence of these changes, we have also slightly adjusted the revenue expectations for our various business units,” added Winkler. In the aftermarket business more and more customers are opting for flight hour agreements in which maintenance services are invoiced at a flat rate per flying hour rather than on an actual time and material basis.

The greatest increase in revenues in the first six months of 2015 was registered by the commercial maintenance business, where revenues grew by 32% from €572.9 million to €754.2 million. The main source of these revenues was the V2500 engine that powers the Airbus A320 family.

Revenues in the commercial engine business increased by 21% to €1,251.8 million (1-6/14: €1,032.9 million). Here, the key revenue drivers alongside the V2500 were the GP7000 engine for the A380 and the GEnx for the Boeing 787 and 747-8.

Revenues in the military engine business decreased by 5% to €215.3 million (1-6/14: €225.5 million). The EJ200 Eurofighter engine accounted for the greater part of these revenues.

At June 30, 2015, MTU’s order backlog stood at €11,520.4 million, which is 3% higher than at the end of 2014 (€11,176.5 million). This represents a production span of roughly three years. The majority of these orders are for the V2500 and the Geared Turbofan™ engines of the PW1000G family, foremost among them the PW1100G-JM for the A320neo. As Chief Program Officer Michael Schreyögg reported, “We received many orders for these engines and for the GE9X und GEnx widebody engines at the Paris Air Show in June.” These new orders, with a total value of €800 million, are not yet included in the order backlog.

MTU’s commercial maintenance business saw its earnings rise substantially in the first half of 2015, with a 53% increase in adjusted EBIT to €73.5 million (1-6/14: €48.0 million). The EBIT margin gained 1.3 percentage points, rising to 9.7%. “This growth in earnings from commercial MRO activities is due not only to the favorable U.S. dollar exchange rate but also to an increased added value per shop visit,” commented Schreyögg. Earnings in the OEM segment increased by 14% from €122.5 million to €139.2 million, resulting in an EBIT margin of 9.5% (1-6/14: 9.7%).

In the first six months of 2015, MTU spent €102.0 million on research and development projects 1-6/14: €79.2 million). The decrease in the amount of company-funded development costs recognized as expense in the income statement, which dropped from €38.4 million to €24.3 million, is due to MTU’s greater involvement in R&D for new programs, for which the costs can be capitalized as intangible assets. The main R&D focus lies on the Geared Turbofan™ engines and the GE9X for the Boeing 777X.

MTU’s free cash flow in the first half of 2015 amounted to €86.7 million, which is significantly higher than in the same period of 2014 (€17.9 million). “We expect to be able to sustain this positive development through to the end of the year and report a free cash flow in the upper two-digit million range,” said Winkler. Until now MTU had been counting on a free cash flow close to last year’s level of around 40 million euros.

At €38.7 million, MTU’s capital expenditure on property, plant and equipment changed little compared with the same period of the previous year (1-6/14: €39.3 million). “The main purpose of these capital investments is to modernize and expand our production facilities in preparation for the ramp-up of the Geared Turbofan™ programs. This has involved the purchase of numerous items of plant and machinery,” said Schreyögg.

MTU had 8,329 employees at June 30, 2015, which is about the same number as at the end of 2014 (8,333 employees). 

¹Adjusted EBIT = Earnings before interest and tax, calculated on a comparable basis
²Adjusted net income = Earnings after tax, calculated on a comparable basis

MTU Aero Engines – Key financial data for January through June 2015
(Figures quoted in € million, calculated on a comparable basis. Statements prepared in accordance with IFRSs)

MTU Aero Engines – Key financial data for Q2 / 2015
(Figures quoted in € million, calculated on a comparable basis. Statements prepared in accordance with IFRSs)

About MTU Aero Engines
MTU Aero Engines AG is Germany’s leading engine manufacturer, with core competencies in low-pressure turbines, high-pressure compressors, turbine center frames, manufacturing processes and repair techniques. MTU plays a key role in the new engine market through its partnership in many international development, manufacturing and sales programs, to which it contributes its high-tech components. One third of the global fleet of passenger airliners relies on components supplied by MTU. MTU is one of the world’s top 5 providers of maintenance services for commercial aircraft engines and industrial gas turbines. These activities are combined under the roof of MTU Maintenance. In the military sector, MTU Aero Engines is the lead industrial partner for almost every type of engine flown by the German armed forces. MTU operates affiliates around the globe; its corporate headquarters are based in Munich, Germany.

Cautionary note regarding forward-looking statements
Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, competition from other companies in MTU Aero Engines’ industry and MTU Aero Engines’ ability to retain or increase its market share, the cyclicality of the airline industry, risks related to MTU Aero Engines’ participation in consortia and risk and revenue sharing agreements for new aero engine programs, risks associated with the capital markets, currency exchange rate fluctuations, regulations affecting MTU Aero Engines’ business and MTU Aero Engines’ ability to respond to changes in the regulatory environment, and other factors. Many of these factors may be more likely to occur, or more pronounced, as a result of terrorist activities and their consequences. MTU Aero Engines assumes no obligation to update any forward-looking statement.