“MTU has made a flying start to the 2023 fiscal year. We have just ended the best quarter in MTU’s history. Both revenue and earnings were well above market expectations,” summed up Lars Wagner, CEO of MTU Aero Engines AG. “The strong demand in the first quarter gives us confidence and supports our growth track. In view of the ongoing supply chain uncertainties, we are retaining our guidance for the full year.”
In the first quarter of 2023, the highest revenue growth came from the commercial engines business, where revenue increased by 60% from €278 million to €446 million. On a dollar basis, the series business registered organic revenue growth of about 40%. In the spare parts business, organic revenue growth was around 35% in US dollars. “The series business was mainly driven by higher deliveries of the Geared Turbofan™ and increased business with industrial gas turbines. In the spare parts business, growth was registered across all platforms, especially engine models for long-haul and cargo aircraft,” reported CFO Peter Kameritsch. The most important revenue generator in the commercial engines business was the PW1100G-JM for the A320neo.
Revenue in the commercial maintenance business rose by 25% in the first quarter to €1.02 billion (1-3/2022: €819 million). The main revenue drivers here were the PW1100G-JM and the V2500 for the classic A320 family.
In the military engine business, revenue totaled €103 million, compared with €108 million in the prior-year period. Kameritsch explained the 5% drop compared with the prior-year quarter: “The military engine business is affected by continued delays in the supply chain.” The main revenue driver was the EJ200 engine for the Eurofighter.
The order backlog was €22.74 billion at the end of the quarter, 2% higher than at year-end 2022 (December 31, 2022: €22.27 billion). The largest proportion of orders on hand was for Geared Turbofan™ engines for the PW1000G family, especially the PW1100G-JM, and the V2500.
MTU’s earnings improved in both the OEM business and the commercial maintenance business in the first quarter of 2023. “In both segments, the first-quarter figures reflect the favorable revenue mix, as well as a lower cost base and positive exchange rate effects on a year-on-year comparison,” said Kameritsch.
In the OEM business, MTU reported an earnings hike of 81% to €141 million in the first quarter (1-3/2022: €78 million). The adjusted EBIT margin in the OEM business rose from 20.2% to 25.8%.
Earnings in the commercial maintenance business were 32% higher at €70 million in the first quarter (1-3/2022: €53 million). The adjusted EBIT margin was 6.8%, compared with 6.4% in the first quarter of 2022.
Research and development expenses amounted to €67 million in the first quarter of 2023 (1-3/2022: €63 million). Performance enhancements for the Geared Turbofan™ programs, technology studies for future engine generations, especially hydrogen and flying fuel cells, and expanding capabilities in the area of virtual engines were the focal areas of R&D at MTU.
Free cash flow was €93 million in the first quarter, compared with €134 million in the prior-year period. Kameritsch: “We made a good start to 2023 and are in line with market expectations. In 2023, we are aiming for the free cash flow to be at least at the prior-year level.”
Net capital expenditure on property, plant and equipment increased by 64% from €38 million to €62 million in the first quarter.
At the end of the first quarter, MTU had 11,559 employees (December 31, 2022: 11,273 employees). “We mainly recruited staff in the area of engineering and for digitalization,” reported Wagner. “We are continuing to raise our headcount to support our future programs and thus safeguard the future of MTU.”
MTU is confirming its guidance for FY 2023. The company expects revenue to be between €6.1 and €6.3 billion at year-end. Revenue is expected to rise fastest in the commercial series business, with organic growth of around 30%. In the spare parts business, organic revenue growth should be in the high teens- to low twenty-percent range. In the commercial maintenance business, organic revenue growth is expected to be in the high-teens percentage range. In the military business, MTU expects revenue to rise by about 10%. The adjusted EBIT margin should remain stable in 2023. This forecast is based on a US dollar/euro exchange rate of 1.10.
