At its virtual Capital Market Day, MTU Aero Engines provided an initial outlook for 2022 and presented its mid-term growth plans. All business areas at MTU should post organic growth again in 2022. The company expects the clearest recovery from the effects of the coronavirus crisis to be in the commercial maintenance business. Moreover, in the mid-term MTU assumes an upturn in all business areas.
“The parameters for a sustained recovery in aviation are intact,” said Reiner Winkler, CEO of MTU Aero Engines. “MTU is well-positioned to return to its growth track in 2022, secure an above-average share of the recovery in the sector and therefore exceed the 2019 level by 2024.”
Chief Financial Officer Peter Kameritsch gave more details: “We are forecasting revenue of between €5.2 and €5.4 billion in 2022 and steady revenue growth up to 2024. Adjusted EBIT should increase in the mid twenty-percent range in 2022 and adjusted net income should develop in line with adjusted EBIT. By 2024, adjusted EBIT should be above the pre-crisis level. We anticipate that by then the cash conversion rate will be in the high double-digit percentage range.”
Commercial maintenance should show the strongest upward trend in 2022. MTU is forecasting organic revenue growth in the mid to high twenty-percentage range. In the period to 2024, the annual rise in revenue in the commercial maintenance business should be in the mid-teens percentage range. “The basis for the good growth prospects are our wide-ranging market
access, our broad portfolio, our custom-tailored MRO solutions and our financial strength. Moreover, MTU has a strong MRO order backlog, which is currently valued at US$17.9 billion,” said Chief Program Officer Michael Schreyögg.
In the commercial maintenance business, MTU stated that it is benefiting from its high share of narrowbody engines in lifecycle phases where there is likely to be a high need for maintenance. It also benefits from its customer base, which includes airlines that serve markets with a high level of domestic flights. MTU notes that these are recovering faster from the effects of the coronavirus pandemic than international passenger flights. Moreover, MTU has many customers in the cargo sector, which is solidly above the pre-crisis level and is supporting the widebody business.
For the commercial series business, MTU is forecasting revenue growth in the mid to high teens percentage range in 2022. This annual growth rate is also expected to continue until 2024. “Our technological edge, crisis-resistant portfolio with stakes in leading engine programs in all segments and our broad customer base play a key role in our good growth prospects here,” said Schreyögg. MTU aims to expand its good market position in the global narrowbody fleet in the next decade. This should be accompanied by a sharp rise in production volume. “MTU is well prepared for significantly scaling up its production, focusing also on its supply chain,” explained Chief Operating Officer Lars Wagner. Production rates should also pick up again in the widebody sector. MTU has good prospects here thanks to its share in the GE9X for the Boeing 777X. Furthermore, the company is well-positioned in the business jets sector, which has proven crisis-resistant with usage rates above the pre-pandemic level. Schreyögg: “We are therefore well-placed for above-average growth.” Wagner added: “With our technology roadmap, which is focused on sustainable and ultimately emissions-free engines, we are positioning MTU as the technology leader to secure an optimal role in future aircraft platforms, leading to further growth
In the commercial spare parts business, the increase in revenue should be in the mid-teens percentage range in 2022, driven mainly by the V2500 for the classic A320 family and the Geared Turbofan for the A320neo. Looking beyond 2022, MTU expects the highest growth rates to also come from narrowbody and regional aircraft. This should be reflected in annual organic revenue growth in the spare parts business in the low teens percentage range up to 2024.
Kameritsch: “We still have a clear focus on profitable growth. We are therefore keeping a close eye on our cost base and are striving for cost leadership in all areas.” To achieve this, MTU is concentrating on automation and digitalization, its best-cost site strategy, leveraging synergies and strict cost management in both production and maintenance. “Our goal is a balanced
leverage ratio of between 0.5 and 1.5 times adjusted EBITDA,” said Kameritsch.
Winkler summed up: “Sustainability is the dominant factor in all of our activities. We have a clear commitment to the principles of the UN Global Compact and are making a contribution to eight of the targets.” Wagner gave some current examples: “Our goal is to make our production climate-neutral. The Munich site is making a start this year. The objective is climate-neutral operation of all MTU sites. We are focusing on continuously reducing emissions from our
products with the aim of developing completely emissions-free engines.”