MTU Aero Engines again at record level in 2013
MTU Aero Engines AG has built on the record year of 2012 with its business figures for 2013: MTU improved its all-time high in revenues to €3,741.7 million (2012: €3,378.6 million).
Earnings matched the record level of 2012: At €377.3 million, operating profit clearly met its target of around €375 million (2012: €375.2 million). The return on sales amounted to 10.1% compared with 11.1% in 2012. At €232.1 million, MTU generated earnings after tax of around €235.0 million as planned (2012: €234.0 million).
“Revenues have fully met our expectations. We achieved the targets updated at mid-year for our results, which shows that MTU remains a strongly profitable enterprise”, concluded Reiner Winkler, CEO of MTU Aero Engines AG, speaking at the annual press conference on Tuesday, February 18, 2014, when the provisional annual financial statements were presented.
In the opinion of experts, growth in air passenger traffic will settle at a high level in 2014. Particularly the Asia-Pacific region, the Middle East, and Latin America have persistently good growth prospects. “Due to the upcoming full-scale production of the GEnx and the increase in deliveries of the V2500 program, the trend toward strong new engine business in 2014 will continue”, said Winkler. “Our new engine business will probably grow at a faster rate than the much more profitable spare parts business in 2014. We are thus paying particular attention to our revenue and cost structures and took measures in 2013 to further improve them.”
MTU expects its revenues in the new engine business to increase by around 10% in U.S. dollar terms. Commercial spare parts sales are expected to rise by a mid single-digit percentage figure expressed in U.S. dollars, while MTU anticipates a decline of around 10% in revenues in the military engine business.
MTU’s commercial maintenance business expects to see a growing demand for maintenance services for the GE90 and V2500 programs. Revenue growth in this segment will be within the mid to high single-digit percentage range, expressed in U.S. dollars. In 2014, group revenues are expected to rise to around €3,750 million (2013 calculated on a comparable basis: €3,574.1 million).
Operating profit (adjusted EBIT, 2013 calculated on a comparable basis: €373.1 million) and earnings after tax (adjusted net income, 2013 calculated on a comparable basis: €229.8 million) are expected to remain stable. These forecasts take into account that from 2014 onward, MTU Maintenance Zhuhai will no longer be proportionately consolidated but accounted for according to the equity method, in accordance with IFRS requirements.
The growth in group revenues in 2013 is primarily due to strong growth in the commercial engine business, where revenues increased by 18% from €1,603.1 million in 2012 to €1,891.3 million. The growth drivers were the V2500 for the Airbus A320 family, the GP7000 engine that powers the Airbus A380 and the GEnx engine for the Boeing 787 Dreamliner and the Boeing 747-8.
At €500.7 million, revenues in the military engine business matched last year‘s level (2012: €503.3 million), with the key revenue driver being the EJ200 Eurofighter engine.
Revenues in the commercial maintenance business rose by 6% to €1,381.8 million (2012: €1,305.7 million). The key revenue driver in this case was the V2500.
MTU’s order backlog of €10,745.5 million (2012: €11,479.6 million) equates to a production workload of around 3 years. “This figure includes only a small proportion of the new contracts we have received – for example during the Paris Air Show – and yet our order backlog in 2013 remains at a very high level,” reported Winkler. “As in previous years, the programs that have generated the highest volume of orders are the geared turbofanTM engines of the PW1000G family and the V2500. They will be our growth drivers in the future, too.” The PW1000G family has been selected to power the Airbus A320neo, the Bombardier CSeries, the new Embraer E-Jet generation, the Mitsubishi Regional Jet and the Irkut MS-21.
In 2013, MTU maintained the earnings level achieved in the record year 2012 in both operating segments. In the OEM segment, the company generated an adjusted EBIT of €263.9 million (2012: €264.1 million) and an EBIT margin of 11.0% (2012: 12.5%). “This lower profit margin is a result of the higher proportion of earnings generated by the new engine business in 2013, which grew at a stronger rate than the spare parts business”, explained Winkler.
The commercial maintenance business achieved an adjusted EBIT of €113.0 million (2012: €113.6 million), resulting in an EBIT margin of 8.2% compared with 8.7% in 2012. “The margin in commercial maintenance is therefore in line with our expectations,” said Winkler.
Research and development expenditure before capitalization came to €193.2 million in 2013 (2012: €241.4 million). This is equivalent to around 10% of revenues in the OEM business, where the research and development expenditure is incurred. Company-funded R&D expenditure recognized in the income statement declined from €113.0 million to €93.2 million. “As expected, the more mature the geared turbofan technology, which is the focus of our R&D activities, the lower the R&D expenditure,” stated Winkler. “We will continue to maintain our generally high R&D commitment as it creates a basis for strong organic growth in the coming years.”
At year-end 2013, MTU had 8,695 employees, 2% more than at year-end 2012 (8,541 employees). To prepare for the ramp-up of the geared turbofan programs, the implementation of the V2500 stake increase, and the expansion of the global maintenance business, capacities were increased particularly at the Hannover, Vancouver and Munich locations.