MTU Aero Engines’ 2014 first-quarter revenues and earnings on previous year’s level

Full-year forecast for 2014 confirmed
Munich, April 29, 2014 – The results reported by MTU Aero Engines AG for the first quarter 2014 are in line with the previous year. Group revenues remained stable at €913.0 million (1-3/13: €906.0 million). MTU’s operating profit1 in the first three months of 2014 amounted to €89.0 million (1-3/13: €88.3 million), resulting in an unchanged EBIT margin of 9.7%. Earnings after tax2 also reached the previous year’s level, and amounted to €56.0 million (1-3/13: €55.5 million).

“The stable earnings in the first three months of 2014 allow us to confirm our full-year forecast,” said Reiner Winkler, CEO of MTU Aero Engines AG. “Our first-quarter revenues were impacted by currency translation effects. An additional factor was the relatively high comparative 2013 figure for the commercial maintenance business, which was due to revenue deferrals. In the further course of the year, we expect revenues to grow to our forecast value of approximately €3.750 million.”

In the OEM segment, revenues from both commercial and military engines were slightly up on the previous year. An increase of 2% to €500.5 million (1-3/13: €488.4 million) was reported for the commercial engine business, which includes engine manufacturing and spare parts. The engines that generated the highest share of revenues were the V2500 engine for the Airbus A320 family, the GP7000 engine for the Airbus A380, and the GEnx engine for the Boeing 787 and 747-8.

Revenues in the military engine business increased by 4% to €116.6 million (1-3/13: €112.2 million) and mainly derived from the EJ200 Eurofighter engine.

Commercial maintenance revenues decreased by 3% to €303.6 million (1-3/13: €313.1 million). The main source of these revenues was the V2500 engine deployed in the Airbus A320 family.

The order backlog at March 31, 2014 amounted to €9,832.4 million, which corresponds to a production workload of almost three years. The majority of these orders concern the V2500 engine, and the PW1000G family of geared turbofan engines. The latter are deployed in the Airbus A320neo, the Bombardier CSeries, the new generation of Embraer E-Jets, the Mitsubishi Regional Jet, and the Irkut MS-21.

MTU’s adjusted EBIT reflects an earnings increase of 3% to €60.8 million in the OEM segment (1-3/13: €59.0 million) and an earnings decrease of 5% to €27.0 million in the MRO segment (1-3/13: €28.4 million). MTU’s EBIT margin in the OEM segment improved from 9.8% to 9.9%, while in the MRO segment it decreased from 9.1% to 8.9%, based on the respective first-quarter results.

In the first 3 months of 2014, MTU’s research and development expenditure amounted to €43.3 million (1-3/13: €53.9 million). Company-funded R&D expenditure recognized as an expense in the income statement amounted to €21.7 million (1-3/13: €28.7 million). The geared turbofan programs represented the main focus of these R&D activities.

MTU’s free cash flow in the first quarter 2014 amounted to €1.1 million, compared with €2.1 million in the first quarter 2013. As CEO Winkler explained, “Our future growth depends on the group’s ability to sustain a high level of capital investment in new projects. This has an effect on free cash flow because we are financing all such expenditure through our operating activities. Nonetheless, our objective for 2014 – which we achieved in the first quarter – is to generate a balanced or even slightly positive free cash flow.”

In the first quarter 2014, MTU boosted capital expenditure on property, plant and equipment by 37% to a total of €22.8 million (1-3/13: €16.6 million). “Here too, we have concentrated specifically on investments that will assure the company’s future,” said Winkler. “This money has been spent on projects related to the ramp-up of the geared turbofan programs, such as purchasing machinery for the blisk manufacturing facility and constructing a new logistics center in Munich, as well as expanding the capacity of MTU Aero Engines Polska.”

As of March 31, 2014, MTU employed a total of 8,290 people (December 31, 2013: 8,343 employees).

The full-year forecasts for the financial year 2014 are unchanged. The MTU group expects to generate revenues of approximately €3,750 million (2013: €3,574.1 million), accompanied by stable operating profits (2013 adjusted EBIT: €373.1 million) and stable earnings after tax (2013 adjusted net income: €235.7 million).