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MTU Aero Engines falls on revised outlook – Suppliers Share Wrap


German engine manufacturer MTU Aero Engines traded down 3.2% on Monday, after the company reported a 1.4% decline in revenue, to EUR1,954.9 million and a 21.1% decline in net profit, to EUR93.4 million, for the nine-month period to 30-Sep-2009.

The slow down in commercial aviation has affected the company, with revenues at its commercial engine business down 6.0% (to EUR790.9 million), cutting more than EUR50 million from its sales. A pick up in the military engine business (+3.3%) and in the commercial MRO sector (+1.6%) have not been enough to fully compensate for the slowdown in the commercial engine segment.

Overall EBIT was down 11.8% year-on-year, to EUR210.8 million, mostly due to a 24.1% decline in EBIT in original equipment manufacturing (OEM). EBIT from MRO activities surged 70.6% year-on-year, increasing from EUR32.6 million to EUR55.6 million. However, EBIT margins in OEM were roughly twice that of MRO (13.7% vs 6.8%).

The company has also significantly increased its research and development activities, sending R&D expenses up by 24.1%, to EUR149 million. Of this, EUR80 million has been directly funded by MTU Aero Engines, a 33.6% increase.

Despite the global economic slowdown, MTU managed a slight increase in the value of its order backlog, from EUR4,015.7 million at the end of 2008 to EUR4,068.2 million at the end of Sep-2009. The strongly performing MRO segment increased the value of its order backlog from EUR131.4 million to EUR145.9 million over the nine-month period, accounting for a quarter of the overall backlog increase. The order backlog is equivalent to approximately 1.5 times annual revenue.

US dollar weakness and the changing business situation have resulted in MTU reducing its overall revenue forecast for 2009 from EUR2.8 billion to EUR2.6 billion. However, the shift in the company’s business mix has prompted it to increase its full-year EBIT forecast from EUR280 million to EUR290 million (an operating margin of approximately 11%). Full year net profit forecast was maintained at EUR140 million.

Elsewhere, shares in EADS slipped 3.7% and Boeing dropped 3.2%.

Selected Aviation suppliers’ daily share price movements (% change): 26-Oct-09

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