MTU Aero Engines AG (MTUAF) Q3 2024 Earnings Call Highlights: Strong Revenue Growth and ...

GuruFocus News
4 min read

In This Article:

  • Adjusted Group Revenues: EUR5.3 billion, up 14% year-on-year.

  • EBIT Adjusted: EUR744 million, a 25% increase.

  • EBIT Margin: 14%.

  • Net Income Adjusted: EUR541 million, up 23%.

  • Free Cash Flow: EUR213 million.

  • Total OEM Revenues: EUR1.8 billion, up 11%.

  • Military Revenues: EUR426 million, up 16%.

  • Commercial Business Revenues: Almost EUR1.4 billion, up 9%.

  • Reported MRO Revenues: EUR3.6 billion, up 15%.

  • Commercial MRO EBIT Adjusted: EUR300 million, up 35% with a margin of 8.4%.

  • Updated EBIT Guidance for 2024: Slightly over EUR1 billion.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • MTU Aero Engines AG (MTUAF) achieved adjusted group revenues of EUR5.3 billion in the first nine months of 2024, marking a 14% increase from the previous year.

  • The company raised its earnings forecast for 2024, with adjusted EBIT now expected to exceed EUR1 billion, reaching its 2025 target a year ahead of schedule.

  • The MRO segment showed robust performance, with EBIT adjusted increasing by 35% to EUR300 million, resulting in a margin of 8.4%.

  • The spare parts business performed strongly in Q3, particularly for narrowbody and mature wide-body platforms, reinforcing confidence in meeting full-year targets.

  • MTU's lease and asset business significantly contributed to EBIT, benefiting from high lease demand and strong asset management operations.

Negative Points

  • Ongoing supply chain issues continue to pressure working capital, affecting the company's operations.

  • Lower delivery numbers of new aircraft have resulted in a reduction of new engine shipments to air framers.

  • The GTF share in MRO remains slightly below the full-year expectation, indicating potential challenges in meeting targets.

  • The company faces uncertainty in the exact timing of compensation payments to airlines, impacting free cash flow guidance.

  • The delay in the 777X program is expected to result in higher working capital levels and slower revenue ramp-up.

Q & A Highlights

Q: Can you provide details on the timing of GTF fleet management plan compensation and the spare engine mix? A: Peter Kameritsch, CFO, explained that the payment schedule for the fleet management plan is expected to move slightly to the right, with full provisions likely completed by 2025 or 2026. Regarding the spare engine mix, Lars Wagner, CEO, noted that the mix depends on market conditions and production ramp-up.

Q: How have supply chain improvements affected spare part sales, and have MRO contract terms changed? A: Peter Kameritsch, CFO, stated that supply chain improvements have been better than expected, but challenges remain. MRO contract terms have not changed significantly; the profitability increase is mainly due to strong leasing and asset management.

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