MTU Aero Engines reports decline in revenue and earnings

In the first six months of 2020, MTU Aero Engines AG generated revenue of €2,048.8 million compared to €2,243.0 million in the first half of 2019. Operating profit was €224.2 million, compared to €365.2 million in the prior-year period. The EBIT margin was 10.9% in the first six months of 2020 (1-6/2019: 16.3%). Net income declined from €261.0 million to €161.3 million.

“The figures reflect the first effects of the coronavirus pandemic,” said Reiner Winkler, CEO of MTU Aero Engines AG. “A better estimate of the quantitative impact of the coronavirus crisis is now also possible. On Friday, we therefore issued new guidance for 2020.” MTU now expects to generate revenue of around €4.0 billion to €4.4 billion in 2020. In percentage terms, the company anticipates an organic decline in the mid-to-high twenties in the commercial series production business and in the high twenties in the spare parts business. In the commercial maintenance business, an organic revenue reduction in the low-to-mid-single-digit-percentage range is expected. Revenue in the military engine business should grow slightly. MTU is forecasting an adjusted EBIT margin of between 9% and 10% for 2020. Adjusted net income should develop in line with EBIT. Furthermore, MTU has set itself the goal of closing the year with a positive free cash flow.

Revenue from the commercial maintenance business was stable at €1,272.3 million in the first six months (2019: €1,287.3 million). The main revenue driver was the V2500 for the classic A320 family, followed by the PW1000G-JM for the Airbus A320neo, where MTU registered an increase in shop visits in connection with the retrofit program.

In the commercial engine business, revenue fell from €773.0 million to €630.6 million. The main revenue drivers were the V2500, the PW1100G-JM and the GEnx, which is used in the Boeing 787 and 747-8 models.

In the military engine business, the three-week suspension of operations in April was the main reason for the drop in revenue to €183.2 million (2019: €216.0 million). The main source of revenue was the EJ200 Eurofighter engine.

The order backlog at the end of the first six months remained high at €18.4 billion (December 31, 2019: €19.8 billion). The majority of these orders relate to the V2500 and the Geared Turbofan™ engines of the PW1000G family, in particular the PW1100G-JM for the Airbus A320neo. (€1.00 = US$1.18 at time of publication.)

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