At half-year, MTU Aero Engines AG has raised its forecast for 2019. The company is now projecting an adjusted EBIT margin in the region of 16%. The original forecast had been 15.5 % (2018: 14.7 %). “The increase in the earnings outlook mainly reflects two factors: One is that our MTU Maintenance Zhuhai site in China developed somewhat more positively than anticipated. In addition, changes in the product mix also had a positive effect,” said Reiner Winkler, CEO of MTU Aero Engines AG. Net income adjusted is expected to increase in line with EBIT adjusted (EBIT adjusted, 2018: €671.4 million, net income adjusted, 2018: €479.1 million). The cash conversion rate – that is, the ratio of free cash flow to net income adjusted – is expected to lie between 65 and 70% in 2019. MTU’s previous forecast specified a target range between 55 and 65% (2018: 42%).
In the first six months of 2019, MTU generated revenues of €2,243.0 million, which is 4% higher than in the first six months of 2018 (1-6/2018: €2,148.6 million). Adjusted for one-time effects arising from internal changes in contracting and invoicing processes, the growth in revenues expressed in euros would have amounted to around 12%. The group’s operating profit increased by 9% from €334.6 million to €365.2 million. The EBIT margin rose from 15.6% to 16.3%. Net income increased by 10 % to €261.0 million (1-6/2018: €237.0 million).
MTU has maintained its forecast for an increase in revenues to around €4.7 billion (2018: €4.6 billion), based on the expectation that the commercial series production business will grow organically by a percentage in the low teens, and that spare parts sales will increase by a percentage in the mid-to-high single digits. Revenues in the military engine business are expected to increase by around 10%. A high single-digit percentage organic growth rate is expected in the commercial maintenance business.
The area in which MTU recorded the highest revenue growth in the first six months of 2019 was the commercial engine business, where revenues increased by 13 % from €687.0 million to €773.0 million. The major part of these revenues was attributable to the V2500 engine for the classic A320 family and the PW1100G-JM for the A320neo.
] Net income adjusted = Earnings after tax, calculated on a comparable basis