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MTU Aero Engines AGCompany Presentation
April 2018 – Investor Relations
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Contents
1. Company Overview
2. Commercial OEM Business
3. Military OEM Business
4. Commercial MRO Business
5. Financials & Outlook
6. Digitization @ MTU
7. Corporate Responsibility
8. Appendix
2
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Contents
1. Company Overview
2. Commercial OEM Business
3. Military OEM Business
4. Commercial MRO Business
5. Financials & Outlook
6. Digitization @ MTU
7. Corporate Responsibility
8. Appendix
3
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
• Risk and revenue sharing partner
with major OEMs
• Focus on Low-Pressure Turbines,
High-Pressure Compressors and
Turbine Center Frames
• Approx. 30% of active aircraft with
MTU participation
• Capability to develop and
manufacture entire engines
• R&D is typically customer financed
• MTU has high shares in key
European military programs
• World's largest independent engine
MRO provider (Maintenance, Repair
and Overhaul)
• Exposure to highest growth engines
(V2500, CFM56, CF34, GE90)
• Strong presence in Asia
4
Commercial Business Military Business Commercial MRO
MTU is Built on Three Pillars
Sales* € 2,470 m (48 %) € 404 m (8 %) € 2,285m (44 %)
OEMBusiness MRO
EBIT margin* 14.3 % 8.5 %
MTU Group* Sales: € 5,036 m / EBIT margin: 12.0 %
* FY 2017 - figures
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Attractive market
• Airframers‘ order books equal 8-9 years of production
• Current passenger traffic growth of ~7% above historical levels of 5%
Strong market position
• Business jet revenues to triple over the next 10 years driven by new PW800
• GTF engines dominate future regional jet market by 90%
• Narrowbodies: V2500 key driver of aftermarket, GTF strengthens footprint by higher
market and MTU program share
• Participation in all new GE widebody programs leads to a balanced engine portfolio
• Commercial MRO: Exceptional growth achieved by extensive service and engine
portfolio
• MTU is a pure aero engine player with high exposure to the aftermarket
High visibility
• Mid to long term new engine production plans well known
• Fleet in service and regulatory requirements give high predictability in the aftermarket
• High barriers to entry
5
Key Investment Highlights
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Contents
1. Company Overview
2. Commercial OEM Business
3. Military OEM Business
4. Commercial MRO Business
5. Financials & Outlook
6. Digitization @ MTU
7. Corporate Responsibility
8. Appendix
6
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
7
Key market participants in large engine business
Overview of Aero Engine Industry Players
Material
suppliers
Engine component
suppliers
Engine sub-system
(module) providers
OEMs
Aero Engine Industry Characteristics
• Industry players are specialized in
different modules/technologies
• Oligopolistic structure of market
**former Volvo Aero
• High barriers to entry
High technology expertise required
Substantial up front investment (R&D, Concessions) required
Long term contracts
Structurally capative spare parts business
Certification requirements and regulatory approvals
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
8
MTU‘s engine portfolio is well balanced between young and mature programsBalanced Product Portfolio
R&D
Series production
Phase-out
Aftermarket ( Spare parts + MRO)
cum
ula
tive C
ash F
low
GP
7000
(A380)
PW
6000
(A318)
PW300
(G200, 328JET,
Sovereign, Falcon 7X,
Latitude)
PW500(Cessna XLS, Cessna Bravo)
CF6-50
/80A
CF6
-80C
(A300, A310,
747, 767)JT8D-
200
(MD-80)
(747, 767, A300,
A310, DC-10)
CF6-
80E
(A330)
PW
1200G
(MRJ)
GEnx
(787 &
747-8)
Entry into service
PW
1100G
(A320neo)
PW
1400G
(Emb E2 Jet)
PW
1700G
1900G
(Irkut
MS-21)
(777X)
V2500
(A320, MD-90)
(757, C-17)
PW800
(G500,
G600)
PW
1500G
(CSeries)
GE9X
PW
4000G (777)
PW
2000
Life cycle cash flow profile of commercial MTU engines
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
9
MTU’s Continuous Growth is Supported by all Market Segments
0
20
40
60
80
100
120
140
2016 2018 2020 2022 2024 2026
OEM market volume ($bn)
CAGR Aircraft
Segment*
Mid single digit Widebody (50-120 klb)
Mid single digit Narrowbody (20-50 klb)
High single digit Regional jet (13-24 klb)
High single digit Business jet (3-16 klb)
CAGR 2016-2026
Total market Mid to high single digit
MTU projects outperformance of market growth in 3 out of 4 segments.
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
• Installed base of more than 7,600 engines
• 10 business jet applications in operation
• Successful market introduction of Cessna Latitude
• Dassault Falcon 8X in development
• Program share of 15%
• Exclusive engine for future Gulfstreams and future
Dassault Business Jet
• MTU will be responsible for the LPT, the first four
stages of the HPC and will participate in the MRO
• EIS expected in 2018 (G500), 2019 (G600) and 2022
(Dassault)
10
PW300 / PW500 PW800
Business Jet Market
MTU’s turnover in the segment will triple within 10 years
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
• Program share of 15%
• Exclusive engine for MRJ with seats
up to 92 passengers
• First flight in Nov 2015
• EIS expected in 2021
• Program share of 17%
• Exclusive engine for the Bombardier
CSeries
• EIS in July 2016 with launch
customer Swiss International
Airlines
• Program share of 15-17%
• Exlusive engine for Embraer‘s 2nd
Gen E-jets
• Embraer is current market leader
with large customer base
• First flight of E190-E2 with
PW1900G in May 2016
• EIS in 2018-2020
11
PW1200G (MRJ) PW1500G (CSeries) PW1700G/1900G (E2-Jets)
Regional Jet Market
MTU and its partners will dominate the future regional jet market with more than
3,000 engines already ordered or optioned
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
12
GTF Engines will Dominate the Regional Jet Market
Market change towards PW1000G engines
Other JetsOther Jets
EIS: 2001/2004 2004/2006 today 2016 2020 2018 / 2019 / 2020
EMB175 / 190 / 195-E2MRJ70 / 90CSeries
Today: CF34 dominated Future: PW1000G dominated
CF34:
91 %
PW1000G:
90 %
EMB170 / 190 / 195CRJ700/ 900
Deliveries:
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
• ~ 6,500 engines flying
• Most important program w.r.t. revenue contribution
• Strong growth of spare parts sales until mid of next
decade
• #1 MRO provider - capability in 3 locations
• Market share in NB segment ~24%
• Program share increase in 2012 from 11% to 16%
• Strong order book
• 16% improved fuel efficiency
• Designed for lower maintenance cost
• ~50% market share on A320neo family expected
• Increase in Market share in NB segment (~30%)
• Program share of 18%
• EIS 2016
13
V2500 PW1100G-JM
Narrowbody Market
Excellent narrowbody market position leads to continuous OEM & MRO growth
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
• Market share of ~ 50% on the A380
• In production since 2007
• ~ 500 engines in service
• Production peak in 2015
• Market share of 60% on 787,
exclusive on 747-8
• In production since 2011
• ~ 1000 engines in service
• Market expectation of 4,400 engines
• MTU is partner of the GE-MRO
network
• Exp. MRO revenue 3 bn€
• Revenue potential 4 bn€
• 950 orders and options
• Entry into service expected in 2020
• Exclusive engine for Boeing 777X
• MTU will be partner of GE-MRO
network
14
GP7000 GEnx GE9X
Widebody Market
Strong partnership with GE Aviation in the widebody market
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
15
OEM Production Status and Ramp-upRamp-up figures
Volume increases by a factor of 4 in one decade
2009 2017 2020
Turbines 800 1,300 1,750
Compressors 200 750 1,650
Turbine Center
Frames50 250 300
Engine
Assembly50 150 300
Total 1,100 2,450 4,000
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
MTU AE Munich
• Sophisticated parts and production
processes
• Automation
• Development of new production
technologies
• Know How to support all MTU sites
and suppliers
MTU AE Polska
• Adopting established parts and
production lines from Munich
• Improvement of ‘mid tech’ parts and
production processes
• Module assembly improved with know
how transferred from automotive
industry
Supplier
• Raw parts
• Finished parts as second source
• ‘Low tech’ parts from low cost countries
16
High Tech Mid-Low Tech Raw Material, Mid-Low Tech
Strategic Setup Production and Supply Chain
• Keeping and improving MTU’s high tech knowledge in Munich
• MTU Polska as prime source for ‘mid tech’ parts – supplier as second source
• Dual Source
• Development of advanced manufacturing technology at MTU Munich
Risk Mitigation
The supply chain is based on 2 MTU manufacturing sites and a worldwide network of suppliers
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
17
MTU Commercial OE: Outlook 2017 to 2027 (in m€)Growth secured by strong order books and better diversification
Today (2017 E) Future (2027 E)
• ~ 3/4 of Com OE revenues is generated by
PW1100G, V2500 and GEnx
• Transition of V2500 to PW1100G in 2017-2018
• V2500 peak installed base in 2018
• GEnx stable production
Wide-
body
Narrow-
body
• PW1000G engine family key revenue driver in
future; GTF engine production >1000 by 2020
• EIS of next gen RJ starts from 2016 to 2020
• GEnx and GE9x main revenue driver of widebody
segment
• PW800 driver in business jet segment
CAGR
Wide-
body
Business Jets Others
Narrow-
body
Regional
Jet
Business JetsOthers
Regional Jets
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
18
MTU Commercial Spare Parts: Outlook 2017 to 2027 (in m€)More diversified spare parts portfolio and growth in all segments
Today (2017 E) Future (2027 E)
• ~ 3/4 of com. spare parts revenues are generated
by V2500, CF6-80 and PW2000
• V2500 FhA Coverage ~ 60%
• CF6-80 stable towards end of decade
• PW2000 decrease towards end of decade as
expected
Wide-
body
Narrow-
body
• V2500 spares peak 2023-2025
• GEnx, GP7000 increase spare parts volume
• PW1000G will produce spare parts sales early 20s
• New engine programs with ~ 40% of sales in 2027
• GE9x aftermarket starts in 2nd half 2020s
CAGR
Wide-
body
Business JetsOthers
Narrow-
body
Regional Jet
Business Jets
Others
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Contents
1. Company Overview
2. Commercial OEM Business
3. Military OEM Business
4. Commercial MRO Business
5. Financials & Outlook
6. Digitization @ MTU
7. Corporate Responsibility
8. Appendix
19
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
• Strong revenue contribution, both
OEM&MRO
• ~ 500 Eurofighter in service
• ~ 1,200 engines delivered
• Production of new engines until
2021
• Strong export potential
• Ramp up successfully achieved
• ~ 200 engines produced
• 174 A400M aircraft on order
• Aircraft well positioned for export
• Power for CH-53K for US marine
corps
• Latest Technology Turboshaft
engine
• First flight October 2015
• Engine could be used for additional
applications
• Strong transatlantic partnership
20
EJ200 TP400-D6 T408
Military Business
Successful new product introduction for the international military market
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Overview about Military Engine Programs and Business Outlook
21
Fighter,
trainer Eurofighter
EJ200
TransportA400M
TP400
KC390
V2500
HelicopterCH-53K
T408
CH-53K
Export potential
203020252020 20352017
NGWSEurofighter
Upgrade, Tranche 1 replacement
ExportEurofighter
Kuwait, Qatar
Saudi Arabia
A400M
Export potential
12th December 2017 Investor & Analyst Day 2017 - Munich
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
22
MTU Military Revenue Outlook 2017 to 2027 (in m€)Military revenue range 400-500 m€
Today (2017 E) Future (2027 E)
• Military revenues expected to remain stable at
lower level of ~400 m€ in 2018-2019
• EJ200 remains main revenue driver despite run
out of Tranche 3a series production
• Stable RB199 MRO revenue contribution
• Stretching of TP400 series production
Series
Aftermarket /
Services
Series
Aftermarket /
Services
Upside
Potential
• Military revenues expected to increase to ~ 500m€
by 2027
• Upside potential for export EJ200 / TP400
• T408 – EIS in 2019 – Strong revenue contribution
mid of next decade
• Phase out of RB199
CAGR
Revenues ~ 400 m€ Revenues ~ 500 m€
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Contents
1. Company Overview
2. Commercial OEM Business
3. Military OEM Business
4. Commercial MRO Business
5. Financials & Outlook
6. Digitization@MTU
7. Corporate Responsibility
8. Appendix
23
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Characteristics:
24
Independent MRO OEM cooperation
MTU’s Diversified Approach Ensures a Broad MRO Market Coverage
• Direct customer contact
• Over 900 customers
• Highly competitive market
• Customized services
• Highly competitive MRO shops due to low labor
cost environment
• OEM is contract holder
• Long term deals with focus on reducing life-cycle
cost
• MTU is OEM network partner
• MRO share is secured at program entry for entire
life
Targets: • Remain #1 provider with focus on customers
• Provide integrated life cycle services
• Develop current and investigate future airline
cooperations
• Provide cost-efficient, industrialized MRO
• Leverage OEM network
Partners: • JV with China Southern
• JV with LH Technik (ASSB)
• OEM
• JV with LH Technik (EME Aero)
• CF34, CF6, CFM56, GE90G, PW2000, V2500,
Parts repair, LM IGTs, Vericor
• GEnx, GP7000, PWC, V2500, PW1000G, GE9XPrograms:
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
25
MTU’s MRO Portfolio is the Basis for Future Growth
0
10
20
30
40
50
60
2015 2017 2019 2021 2023 2025
MRO Market Volume ($bn)
CAGR Market Approach Portfolio
Mid
single
digit
No access as
of today–
High
single
digit
Independent
or Airline
Cooperation
CF34, CFM56,
CF6, GE90G,
PW2000, V2500
High
teensOEM Cooperation
PW1000G, GEnx,
GP7000, V2500…
CAGR 2015-25
Total Market High single digit
MTU-served Low teens
Source: MTU, escalated
MTU has the largest engine MRO portfolio of all providers:
The market MTU serves will grow over-proportionally at low teens level p.a.
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
26
As the Majority of New Engine Platforms are Sold with OEM Flight Hour
Agreements more Shop Visits will be Subcontracted by the OEM
Today’s Revenues* (2017 E) Future Revenues* (2027 E)
OEM
cooperation
CAGR
IndependentIndependent
OEM co-
operation
EBIT adj.
Margin
~10%
EBIT adj.
Margin low to
mid single
digit
MTU expects to grow in both market segments with stronger growth in OEM cooperation
business, leading to increasing pressure on profitability
*) incl. MTU-Zhuhai (100%)
OEM co-
operation
Independent
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
27
Expansion of MRO Capacity with Clear Focus on Best Cost Initiated
Capacity needs vs. availability
Total capacity increase
~50%
High cost countries:
short-term increase of
workstaff
Low-cost countries:
doubling of capacity
Low-cost portion to total
capacity increases from
30% to 50%
Efficiency program started
to secure profitable growth
Capacity needs
High cost
locations
Best cost
locations
Long-term growth will be at best-cost sites within the MRO network
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
28
MRO Expansion StrategyMTU Zhuhai: Growing portfolio and customer base requires increase of capacity
Today: no.1 MRO Shop in China and most efficient NB MRO shop world-wide
2018 2020 2022 2024 2026
Max. capacity
Mature engine
platforms
New engine
platforms
MTU Maintenance Zhuhai Ltd.
• 50:50 JV with China Southern since 2001
• Current capacity ~300 shop visits after
extension in 2012 (+50%)
• Workforce ~800
• ~50% of visits are from 3rd party airlines
• Growing customer base
• Current portfolio: V2500 and CFM56
• Target to expand to new engine platforms
• Increase capacity by another 50%
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
29
MRO Expansion StrategyEME Aero: New GTF MRO facility
The new shop will have a key role in the GTF MRO network
• Company founded December 2017
• 50:50 joint venture with LHT
• Total investment of €150m
• One product shop: GTF only
• Start of operations in 2020
• Work force max. ~ 800 employees
• Full utilization of capacity in 2028
2018 2020 2022 2024 2026 2028
Max. capacity
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
30
MRO sites
MTU Maintenance
Berlin-Brandenburg
BJ + RJ + IGT
New logistics center
Expansion of BJ portfolio
MTU Maintenance Hannover
NB + WB engines
Short-term increase in
personnel
GTF maintenance
Expansion repair technologies
Airfoil Services (ASSB)
JV with LH Technik
NB + WB parts repair
Dedicated to parts repair –
now and in the future
Program expansion
MTU Maintenance Zhuhai
No. 1 MRO shop in China
Expand customer base and
grow NB engine portfolio
Increase capacity
MTU Maintenance
Canada
NB + WB engines and
accessories
3rd MRO shop for V2500
Growth strategy for
accessories business
MTU Maintenance
Lease Services
Expansion of (RJ + NB + WB)
engine lease pool and asset
management
EME AERO
New GTF MRO shop
50:50 JV with LHT
Facility in best cost region
Start in 2020
MTU Maintenance Centers of Excellence
All locations are getting ready to efficiently master future growth
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Contents
1. Company Overview
2. Commercial OEM Business
3. Military OEM Business
4. Commercial MRO Business
5. Financials & Outlook
6. Digitization @ MTU
7. Corporate Responsibility
8. Appendix
31
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
32
Guidance 2018
Military: Stable
Commercial OE: Up ~30%
Commercial Spares: Up mid single digit
Commercial MRO: Up in the high teens
Organic Growth:
EBIT adj. Moderate progression
* Cash Conversion Rate = Free Cash Flow/Net Income adj.
Net income adj. Growth in line with EBIT adj.
CCR* Low to mid double digit
21 February 2018 Preliminary Full Year Results 2017 - Investor Relations
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
33
Long term outlook 2019-2025 update:
Improved Free Cashflow conversion reconfirmed
Consolidation phase 2019-2025
Net income adj. Steady growth
Working capital
Growing less than revenues+ No consumption of prepayments+ Inventory turns will improve+ More FHAs with preferential Cashflow profile
CF from investing
Will go into decline+ Less payments for intangibles+ Less spendings for capacity build-up (PPE)+ R&D capitalization declines as programs enter into
service
CCR* High double digit %
* Cash Conversion Rate = Free Cash Flow/Net Income adj.
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
MTU’s Cash Deployment Strategy
34
Share buyback
programs
M&A
Dividend
deployment
Investment in
organic growth
Strong investment
in new programs
Limited
opportunities
Growth in line with
net income
Growth stronger
than net income
No buyback programs as
cash conversion low
Instrument to
limit deleveraging
No suitable targets in aircraft
engine market
I
II
III
IV
PrioInvestment phase
2014-17
Consolidation phase
2018 - 25
No new targets
expected
Instrument
MTU´s target is a balanced leverage ratio in the range of 1 x net Debt / EBITDA
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
US$ Exchange Rate / Hedge Portfolio
35
Hedging ModelHedge book as of February 21, 2018 (% of net US$ exposure)
in mUS$US$ Exposure
• Approx. 75% of US$ revenues
are covered with US$ costs via
procurement (“natural hedging”).
• US$ sensitivity will rise over the
next years due to increasing net
US$ exposure
Rolling Hedging Model
• Exchange rate analysis and
new hedging contracts on a
quarterly basis
• Hedging period: 12 following
quarters
2017 2018 2019 2020
1,074
(= 97%) 1,030(= 77%)
650(= 46%)
1.18 1.15 1.16
Average
hedge rate
(US$/EUR)
• For MTU hedging remains an instrument for risk mitigation
• Sensitivity pre hedging: 10 ct move in US$/€ exchange rate has an impact of ~ € 90m on EBIT (2018)
90(= 6%)
1.24
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Contents
1. Company Overview
2. Commercial OEM Business
3. Military OEM Business
4. Commercial MRO Business
5. Financials & Outlook
6. Digitization @ MTU
7. Corporate Responsibility
8. Appendix
36
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
37
Impact of Digitization on MTU‘s Business Model
Digitization will not fundamentally alter the business model of MTU in the medium term
but provides with opportunities to improve competitiveness further within the industry
Impacton p
roduct, b
usin
ess
model
(“D
isru
ptive
“)
Impact on cost structure, quality, etc.
(“Evolutionary“)
In B2C industries,
digitization partly leads
to a serious change in
the business model
For companies in B2B
industries, process
improvements are often
the focus of attention
B2C
B2B
ServicesTrade /
Commerce
LogisticsAuto-
mobile
Insurance
Finance/
Banking
Media
Engineering Chemistry
MTU
MRO
MTU
OEM
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
38
Digitization@ MTU Focus on 4 Areas of Activity
Work 4.0
MRO 4.0
Technology 4.0
Production 4.0
Robotic process
automationDigital twin
Unified collaboration
& communicationE-learning
IT security
Virtual engine
Additive
manufacturing
Material &
manufacturing simulation
Optimized material
flow/Logistics 4.0
Intelligent
machine
control
Predictive analyticsPredictive maintenance (ETM)
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Contents
1. Company Overview
2. Commercial OEM Business
3. Military OEM Business
4. Commercial MRO Business
5. Financials & Outlook
6. Digitization @ MTU
7. Corporate Responsibility
8. Appendix
39
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
• Sustainable business practices
Compliance, corporate governance, risk
management, ratings & rankings
• Environmental protection
MTU climate strategy, environmental
management on the shop floor
• Product responsibility
Eco-efficient engines / Clean Air Engine,
sustainable production and maintenance
procedures, European SRIA standards*
• Responsibility toward employees
Occupational health & safety, work-life balance,
development of young talent
• Commitment to society
Economic cooperation / support of universities
and research institutes, local sponsoring
40
Corporate Responsibility
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Contents
1. Company Overview
2. Commercial OEM Business
3. Military OEM Business
4. Commercial MRO Business
5. Financials & Outlook
6. Digitization @ MTU
7. Corporate Responsibility
8. Appendix
41
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
FY 2017: Group Revenues up 6%
42
MTU Group Revenues
in m € in m €
* MRO (on US$ basis ): up 23%
** Organic Commercial OEM US$ revenues up mid single digit
Segment Revenues
4.733
5.036
FY 2016 FY 2017
2.4012.469
504 404
1.9142.285
FY 2016 FY 2017
Commercial Business Military Business MRO
Appendix
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
FY 2017: Group EBIT adj. Margin at 12%
43
MTU Group EBIT adj. Segment EBIT adj.
in m € in m €
503
607
FY 2016 FY 2017
322
412
182
194
FY 2016 FY 2017
14.3%
11.1%
8.5%9.5%
10.6%12.0%
OEM MRO marginMRO OEM marginGroup margin
Appendix
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
MTU‘s Credit Ratings Represent Investment Grade
44
Loan Details Amount Coupon Issue date Maturity
Convertible Bond 500 m€0.125%
Conversion Price € 124.7701 (Premium 50%)17 May 2016 17 May 2023
Notes
(Private Placement)100 m€ 3.55 % 12 June 2013 12 June 2028
Note purchase
agreement30 m€
Variable interest rate corresponding to the 6-
month Euribor rate plus a percentage margin28 March 2014 27 March 2021
Revolving Credit
Facility600 m€
Customary market reference rates plus an
additional margin;
unused credit facilities are subject to a loan
commitment fee
28 Oct. 2021
MTU is rated by two credit rating agencies:
Moody‘s (Long term) Baa3 negative outlook 23. May 2017
Fitch (Long term) BBB- positive outlook 18. January 2018
Appendix
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
45
Update: Development Milestones of new Engine Programs
With PW1200G and PW1900G two more Geared Turbofan engines were certified in 2017
PW1500G
C-Series
PW1100G
A320neo
PW1200G
MRJ
PW1400G
MS-21
PW1900G
E-Jets 2nd
Gen
PW800
G500 /
G600
GE9X
B 777X
T408
CH-53K
First
engine to
test
Tested in
flying
testbed N/A 2017 N/A
Engine
certifica-
tion 2019 2018*
First flight 2019
Entry into
service 2021 2019 2018 2018 2020 2019
* T408: Certification of whole aircraft system after flight testing
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
The GTF Competitive Advantage
46
Geared Turbofan GTF
Direct Drive Turbofan DDTF
Config 1-G-3-8-2-3
81 in Fan Diameter
Config 1-3-10-2-7
78 in Fan Diameter
GTF relative to Direct Drive Turbofan:
• 25 % less stages
• 45 % less airfoils
• lower cycle temperature
= lower maintenance cost
• higher propulsive efficiency
• higher low spool component efficiencies
• shorter & lighter
= 3 % less fuel burn
• 3 to 4 dB quieter (EPNdB, cum.)
The GTF concept achieves a 16% reduction in fuel burn versus the V2500 predecessor
and a significant competitive advantage over the DDTF
Appendix
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Commercial Engine Fleet
47
Aircraft Segment Engine Program Share Aircraft Application
Widebody
(50 – 120 klb)*
GP7000
PW4000G
CF6-80C
Genx
CF6-80E
CF6-50/80A
GE9X
22.5%
12.5%
9.1%
6.6%
n.n.
n.n.
4%
A380
B777
B747-400, B767, Boeing MD-11, A310
B787 Dreamliner, B747-8
A330
DC 10-30, B767, A310
B777X
Narrowbody
(20 – 50 klb)*
PW2000
PW1100G-JM
PW6000
V2500
JT8D-200
21.2%
18%
18%
16%
12.5%
B757, C-17
A320neo
A318
A320 family, Boeing MD-90
Boeing MD-80 range
Regional Jets
(13 – 24 klb)*
PW1500G
PW1700G/1900G
PW1200G
17%
15-17%
15%
Bombardier CSeries
Embraer E-Jet Gen 2
MRJ
Business Jets
(3 – 16 klb)*
PW300
PW500
PW800
25% (PW305/306)
15% (PW307)
25%
15%
Learjet 60, Do328 JET, Gulfstream G200, Hawker
1000, Dessault Falcon 7X, Cessna Sovereign
Cessna Bravo, Cessna Excel
Gulfstream G500, G600
Appendix
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Military Engine Fleet
48
Aircraft Segment Engine Program Share Aircraft Application
Fighter
Aircraft
EJ200
RB199
F414
30 %
40 %
4.4 %
Eurofighter Typhoon
Panavia Tornado
F414: F/A-18 E/F Super Hornet; EA-18G Growler
Transport
Aircraft
TP400 22.2 % A400M
Helicopter MTR390
T408
40 %
18.4 %
Eurocopter Tiger
CH-53K (US-HTH)
Appendix
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Commercial MRO Business:
49
Top 10 engine MRO providers 2015 – Estimated number of engines under contract
MTU Maintenance is the largest independent and under the Top 5 MRO providers
TOP 10 MRO providers*
MRO Provider Market Share
1. GE Engine Services ~22 %
2. Rolls-Royce ~11 %
3. MTU Maintenance ~10 %
4. Pratt & Whitney ~7 %
5. Lufthansa Technik ~6-7 %
6. Snecma ~4-5 %
7. Air France / KLM ~4 %
8. Delta TechOps ~3 %
9. American Airlines ~2-3 %
10. Standard Aero ~2 %
* Source: ACAS as of 06/2015: *commercial jets, excl. turboprops, business jets and military tanker/transport applications
Appendix
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Financial Calendar 2018 & IR Contact
50
Michael Röger
Vice President Investor Relations
phone: +49 89 14 89-8473
E-Mail: [email protected]
Claudia Heinle
Senior Manager Investor Relations
phone: +49 89 14 89-3911
E-Mail: [email protected]
2018
February 21, 2018
Conference Call
Full year results 2017
April 11, 2018
Annual General Meeting
for the fiscal year 2017
May 3, 2018
Conference Call
Q1 2018 results
July 26, 2018
Conference Call
Q2 2018 results
October 25, 2018
Conference Call
Q3 2018 results
November 30, 2018
Investor & Analyst Day
Matthias Spies
Senior Manager Investor Relations
phone: +49 89 14 89-4108
E-Mail: [email protected]
Appendix
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Cautionary Note Regarding Forward-Looking Statements
51
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. In addition to statements that are forward-looking by reason of
context, the words “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “forecast,” “believe,” “estimate,” “predict,” “potential,” or “continue”
and similar expressions identify forward-looking statements.
Actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) competition from other
companies in MTU’s industry and MTU’s ability to retain or increase its market share, (ii) MTU’s reliance on certain customers for its sales, (iii) risks
related to MTU’s participation in consortia and risk and revenue sharing agreements for new aero engine programs, (iv) the impact of non-compete
provisions included in certain of MTU’s contracts, (v) the impact of a decline in German or other European defense budgets or changes in funding
priorities for military aircraft, (vi) risks associated with government funding, (vii) the impact of significant disruptions in MTU’s supply from key
vendors, (viii) the continued success of MTU’s research and development initiatives, (ix) currency exchange rate fluctuations, (x) changes in tax
legislation, (xi) the impact of any product liability claims, (xii) MTU’s ability to comply with regulations affecting its business and its ability to respond
to changes in the regulatory environment, (xiii) the cyclicality of the airline industry and the current financial difficulties of commercial airlines, (xiv)
our substantial leverage and (xv) general local and global economic conditions. Many of these factors may be more likely to occur, or more
pronounced, as a result of terrorist activities and their consequences.
The company assumes no obligation to update any forward-looking statement.
Any securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”),
and may not be offered or sold without registration thereunder or pursuant to an available exemption therefrom. Any public offering of securities of
MTU Aero Engines to be made in the United States would have to be made by means of a prospectus that would be obtainable from MTU Aero
Engines and would contain detailed information about the issuer of the securities and its management, as well as financial statements.
Neither this document nor the information contained herein constitutes an offer to sell or the solicitation of an offer to buy any securities.
These materials do not constitute an offer of securities for sale in the United States; the securities may not be offered or sold in the United States
absent registration or an exemption from registration.
No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will not be accepted.
© MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
This document contains proprietary information of the MTU Aero Engines AG group
companies. The document and its contents shall not be copied or disclosed to any third
party or used for any purpose other than that for which it is provided, without the prior
written agreement of MTU Aero Engines AG.
52
Proprietary Notice