MTU Aero Engines AG saw its revenues increase by 15% to €1,261.3 millionin the first quarter of 2017 (1-3/2016: €1,097.9 million). The group's operating profit improved by 20% from €131.3 million to €157.0 million, pushing the EBIT margin up from 12.0% to 12.4%. Earnings after tax rose in line with operating profit, increasing by 21% to €111.0 million (1-3/2016: €91.5 million).
"This is a good start to the final year of our investment phase, which we expect to concludein 2017 while remaining on our profitable growth trajectory, "said Reiner Winkler, CEO of MTU Aero Engines AG. "Along this route, we confirm our published year-end targets."
The increase in MTU's first-quarter revenues is primarily due to strong growth in the commercial maintenance business, where revenues increased by 37% to €588.4 million (1-3/2016: €428.8 million). "This is the sixth consecutive quarter in which revenues generated by the commercial maintenance business have beaten all previous records,"added Chief Program Officer Michael Schreyögg. "When we present our year-end results, we also expect the MRO segment to lead in terms of growth."The V2500 engine that powers the A320 family was re-sponsible for the largest part of these revenues.
Revenues in the commercial engine business increased by 10%, from €556.0 million to €611.4 million. The V2500, the GEnx for the Boeing 787 and 747-8, and the PW1100G-JM for the A320neo generated the greatest share of revenues in this business unit.
Revenues in the military engine business dropped by 33% from €124.5 million to €82.9 million. The EJ200 Eurofighter engine was the main source of these revenues. "The first-quarter revenuesreflect a temporal shift in this business unit's revenue stream. The decrease over the year as a whole is likely to be much less significant," saidSchreyögg.
MTU's order backlog reached its highest-ever level of €14,344.9 million at the end of March 2017 (Dec. 31, 2016: €14,172.2 million). The majority of these orders relate to the V2500 and to the geared turbofan engines of the PW1000G family, foremost among them the PW1100G-JM for the A320neo.
Both of MTU's two operating segments reported an increase in first-quarter earnings. EBIT in the OEM segment amounted to €104.4 million, which is 18% higher than the comparable figure of €88.8 million for the first quarter 2016. The EBIT margin rose two percentage points to 15.0percent. Earnings in the MRO segment (commercial maintenance business) improved by 23% from €42.3 million to €52.1 million, resulting in an EBIT margin of 8.9% (1-3/2016: 9.9%).
MTU spent €56.1 million on research and development in the first three months of 2017, compared with €58.6 million in the same period of the previous year. In addition to existing and future gearedturbofan programs, the focal areas of MTU's R&D activities were the GE9X for the Boeing 777X long-haul airliner, various technology studies, and R&D projects relating to next-generation engine design.
MTU's free cashflow at March 31, 2017 amounted to€61.0million (1-3/2016: €93.6million)."By the end of the year, we expect a free cash flow of slightly above 100 million euros," said Winkler.
MTU's capital expenditure on property, plant and equipment in the first quarter of 2017 amounted to €22.5 million (1-3/2016: €20.9 million). "This was mainly used for further optimiz-ing our final assembly line for the PW1100G-JM, "said Chief Operating Officer Dr. Rainer Martens. "Everything is in place to ensure a successful ramp-up for the geared turbofan fami-ly."
MTU had 8,384employees at March 31, 2017, or roughly the same number as at the end of 2016 (Dec. 31, 2016: 8,368).
MTU's full-year forecast for 2017 remains unchanged. Group revenues are expected to lie between €5.1 billion and €5.2 billion (2016: €4,732.7 million), with a stable EBIT margin (2016: 10.6%). Earnings after tax are expected to increase at a higher rate than operating profit, due to a lower interest expense (adjusted net income for 2016: €345.4 million).