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Financial Year 2017: MTU Aero Engines AG Once Again Posts Record Figures

02/21/2018

MUNICH --- MTU Aero Engines AG once again set new records in the financial year 2017. Revenues increased by 6 % from € 4,732.7 million in 2016 to a new high of € 5,036.3 million. Operating profit1 reached a new record level of € 606.6 million, beating the previous year’s result by 21 % (2016: € 503.0 million). Earnings after tax2 surpassed the previous record of € 345.4 million, set in 2016, growing by 24 % to € 429.1 million. 

“We took advantage of the favorable market environment in 2017 to drive profitable growth in both of our operating segments – OEM and MRO. All in all, our performance figures even surpassed the projected earnings that we revised upward for the second time in October,” said Reiner Winkler, CEO of MTU Aero Engines AG, summing up the provisional annual results for 2017 at a presentation on Wednesday, February 21, 2018. 

MTU had expected to generate revenues of around € 5.1 billion in 2017. The earnings forecasts were for an adjusted EBIT of approximately € 600 million and an adjusted net income of approximately € 420 million. 2018 marks the transition from the investment phase to the consolidation phase. “In the current financial year, we are aiming at continued growth,” said Winkler. 

As of 2018, MTU is applying the new IFRS 15 accounting standard, which will lead to a reduction in reported revenues. For the financial year 2017, MTU expects revenues to amount to € 3.65 billion after applying IFRS 15. Operating profit in 2017 is likely to be slightly lower as a result of application of IFRS 15, at around € 570 million. 

Outlook for 2018 

In 2018, commercial series production business looks set to become the fastest growing segment with an increase in revenues of around 30 % in U.S.-dollar terms. “This positive trend is driven by the Geared Turbofan™ programs, growth of which is expected to peak this year,” said Winkler. Continued growth is also projected for the commercial MRO and spare parts business. MTU’s revenue forecast for its commercial maintenance business (MRO segment), expressed in U.S. dollars, is for a growth rate in the high teens, while spare parts sales are expected to increase by a mid-single-digit percentage. Revenues in MTU’s military engine business are likely to remain at the same level as in 2017. “This shows that our business success is unbroken,” added CFO Peter Kameritsch. 

Despite the enormous production ramp-up, MTU is forecasting a moderate increase in adjusted EBIT for 2018 (2017: € 606.6 million), and expects earnings after tax to increase in line with the operating profit (adjusted net income, 2017: € 429.1 million). The cash conversion rate, defined as the ratio between free cash flow and adjusted net income, is projected to be slightly higher in 2018 than in the previous year (2017: 35 %), in the mid-double-digit percentage range. 

MTU’s forecast is based on the assumption that the technical problems encountered in February with regard to PW1100G-JM engines for the Airbus A320neo can be rectified in the short term and will not jeopardize the GTF delivery targets. 

Steep rise in commercial maintenance revenues 

In 2017, the commercial maintenance business achieved the highest growth rate in terms of reve-nues, which increased by 19 % to € 2,285.3 million (2016: € 1,914.4 million). This growth was driven mainly by the V2500 engine for the Airbus A320, followed by the CF34 family of regional and business jet engines. “The revenue distribution reflects the high capacity utilization levels at all maintenance locations,” added Winkler. 

In the commercial engine business, MTU generated revenues of € 2,469.4 million (2016: € 2,401.2 million). The major part of these revenues was attributable to the V2500, the GEnx for the Boeing 787 and 747-8 and the PW1100G-JM engine for the Airbus A320neo. 

Revenues in the military engine business decreased by 20 % from € 504.0 million to € 404.3 million. The main source of these revenues was the EJ200 Eurofighter engine. 

Order backlog at € 13,224.7 million 

MTU’s order backlog decreased from € 14,172.2 million in 2016 to € 13,224.7 million in 2017. “These figures reflect the weaker U.S. dollar exchange rate against the euro and the effects of working off the previous year’s record order backlog,” commented Winkler. The V2500 engine and the Geared Turbofan™ engines in the PW1000G family, in particular the PW1100G-JM, account for the highest number of orders in the current backlog. 

 

 

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Date: 
02/21/2018
Companies & Organizations: MTU Aero Engines
Defense Products & Services Sectors: 
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Sources of Information:  MTU Aero Engines

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