MTU Aero Engines exceeds its earnings targets for 2010

MTU Aero Engines exceeded its earnings forecast for the financial year 2010. Operating profit increased by 7 % from € 292.3 million in 2009 to € 311.3 million.

MTU also improved its return on sales by 0.3 percentage points to 11.5 %. MTU's net income of € 142.2 million was not only higher than the previous year's figure of € 141.0 million, but also above the company's declared target of € 140 million.

Revenues grew by 4 % to € 2.71 billion (2009: € 2.61 billion), just under the forecast figure of € 2.75 billion. MTU also significantly exceeded its free cash flow target, which had also been revised upward during the year. At the end of 2010, free cash flow amounted to € 144.8 million (2009: € 120.2 million).

"The economy recovered perceptibly in 2010, which was a welcome boost for the aviation industry. Thanks to its excellent position in the market, MTU performed very successfully in this environment," commented Egon Behle, CEO of MTU Aero Engines Holding AG. "The market will continue to grow in 2011, and MTU, too, will benefit from that. In fact, both our spare parts business and MRO segment have already started the year well."

Experts are predicting a further increase in both passenger and freight traffic in 2011, mainly driven by growth in the Asia-Pacific region and North America. MTU is a strong player in both regions, also by virtue of its local companies. The company's growth in 2011 is therefore expected to track developments in these markets, with MTU group revenues rising by around 7 to 8 %.

The main growth driver is set to be the commercial engine business, with an anticipated 15-20 % increase in sales. The spare parts business is expected to grow by 5-10 %. By contrast, revenues in the military engine business are likely to fall by 10 %, while commercial MRO sales are expected to increase by 5-10 %.

In 2011, MTU will continue to invest heavily in its future, with an anticipated increase of € 10-15 million in research and development expenditure on its new programs. What is more, capital expenditure on property, plant and equipment will rise by around € 25 million, due to planned investments including the construction of a new production facility in Munich and additions to the company's commercial maintenance program portfolio. In spite of this expenditure, free cash flow is expected to amount to at least € 100 million.

One of the main sources of the higher revenues posted in 2010 was the commercial engine business, which recorded strong growth. MTU's revenues in this segment improved by 12 % to € 1,177.6 million (2009: € 1,053.7 million). The programs that generated the highest revenues from sales of new engines and spare parts were the V2500 for the Airbus A320 family, the PW2000 for the Boeing 757, and the C-17 and CF6-80C engines used to power the Boeing 747, Airbus A310 and Airbus A330.

At € 485.9 million, revenues from the military engine business were lower than expected and lower than the € 532.0 million posted in 2009, in which revenues were boosted by the settlement of a higher-than-average volume of contracts.

MTU generated revenues of € 1,074.0 million (2009: € 1,057.6 million) in the commercial maintenance business, the main source being the V2500 engine which powers the Airbus A320 family.

At December 31, 2010, MTU's order backlog amounted to € 4,506.7 million or 9 % higher than at the end of the previous year (Dec. 31, 2009: € 4,150.9 million). A higher order intake for the GP7000 engine (for the Airbus A380) and the V2500 engine (for the Airbus A320 family) had a positive impact here. The order backlog is equivalent to 1.7 times annual revenues.

A dividend of € 1.10 per share will be proposed to the Annual General Meeting on May 5, 2011, which is 18 % higher than the 2009 dividend of € 0.93 per share. "This proposed increase in the dividend comes on the back of our positive expectations for the company's growth over the next few years," explained CFO Reiner Winkler. "It is our way of thanking our shareholders for the trust they place in MTU, trust which spurs us on in our efforts to strengthen MTU's position in the market and further enhance the value of the company."

At 7,907, MTU's workforce was 3 % higher at year-end 2010 than at year-end 2009 (7,665 employees). The focus of new recruitment fell on MTU Maintenance Berlin-Brandenburg, MTU Maintenance Canada and MTU Aero Engines Polska.

FLUG REVUE 07/2018


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