Mtu Aero Engines Ag · XETR:MTX
Mtu Aero Engines — Investor Day (November 2012)
74 slides from Mtu Aero Engines's investor day presentation, Nov 27, 2012
Slide 1: Investor & Analyst Day 2012
Investor & Analyst Day 2012 MTU Aero Engines Munich, 27. November 2012
Slide 2: Agenda I – MTU Investor and Analyst Day 2012
Agenda I – MTU Investor and Analyst Day 2012 Time Agenda Speaker Peter Kameritsch 12:00 – 12:05 Welcome VP Investor Relations Market Situation / Milestones / 12:05 – 12:30 Egon Behle, CEO Challenges Commerical Business Dr. Anton Binder 12:30 – 13:00 Growth and Transition SVP Commercial Programs 13:0
Slide 3: Agenda II – MTU Investor and Analyst Day 2012
Agenda II – MTU Investor and Analyst Day 2012 Time Agenda Speaker Dr. Jörg Henne The GTF – a Game Changing 15:45 – 16:15 SVP Engineering and Concept Technology Leo Koppers 16:15 – 16:45 Current Trends in MRO Market SVP Marketing and Sales 16:45 – 17:15 Financials and Summary Wrap-up Reiner Winkler,
Slide 4: Market Situation/ Milestones/ Challenges
Market Situation/ Milestones/ Challenges Egon Behle, CEO Munich, 27. November 2012
Slide 5: Outline of Future Air Traffic
Outline of Future Air Traffic Expected growth in passenger traffic Revenue Passenger Kilometres # Aircraft +4.6% p.a. Source: MTU/ASM June 2012, excl. com. helicopters, com. UAVs Airbus foresees the need for some 27,300 passenger airliners for 2012-2031 27 November 2012 Investor and Analyst Day 2012
Slide 6: MTU Revenues: Strategic Target € 6 billion until 2020
MTU Revenues: Strategic Target € 6 billion until 2020 Revenue Growth Drivers 6.000 € 6 bn Target Identified new opp. Next WB, H/C Upshare V2500, 5.000 GEnx, GE90 MRO New business GTF (A320 NEO, (contracted) MS-21, CSeries, 4.000 thereof GTF engines MRJ) V2500 3.000 GP7000 CF6-50/80 2.000 Existing PW
Slide 7: MTU on track for 2020
MTU on track for 2020 Milestones 2020 € 6bn Revenue Target 201x New Widebody (e.g. B777 succ.) 2016 GTF MRO 2015 A320neo First Delivery 2012 IAE Upshare (16%) 2012 Extension MTU Maintenance Zhuhai 2011 GE90 MRO success 2011 GEnx First Delivery 2011 GTF Milestone (18%) 27 November 2012 Investor and A
Slide 8: Commercial OEM Business
Commercial OEM Business • Over 2,900 GTF engines on firm order or optioned • Last Bolt Ceremony of PW1100G (A320neo) was Oct. 26th, first engine run planned for Nov. 28st • PW1500G (CSeries) on track for certification by end of 2012 • Preparation of GTF engine production ramp-up running according to
Slide 9: Military Business
Military Business • EJ200 export campaigns together with Eurofighter currently running in UAE (60 a/c), Oman (12 a/c) and Malaysia (18 a/c) • EJ200 sales initiative in Korea/Indonesia (120/50 a/c) for indigenous fighter aircraft • 1st A400M series aircraft to be delivered to France in Q2/2013 • Mili
Slide 10: Commercial MRO Business over € 1bn in 2012
Commercial MRO Business • GE90 ramp-up successful (4th customer Aerologic, first shop visits successfully performed) • Induction buffer volatile but on high level • Contract volume very positive due to contract wins over € 1bn in 2012 • MRO expected to reach upper area of guidance range 27 November
Slide 11: V2500 Aftermarket Outlook – It’s Coming
V2500 Aftermarket Outlook – It’s Coming Fleet, shop visits, spare parts sales Remarks 1.200 7000 • Shop visit delaying strategies of Shop visits airlines (e.g. engine wash, engine 1.000 6000 swap) have come to an end Fleet 5000 • Reliability improvements of V2500 800 have further delayed shop visits
Slide 12: Upcoming Challenges for MTU
Upcoming Challenges for MTU • Growing Passenger Traffic • Volatile economy • Demanding environmental standards (e.g. ACARE, Flightpath 2050): Market/ - Fuel efficiency Environment - CO2/Noise/NOx reduction • Development Milestones • World class cost structure (GTF engine certification) and supply ch
Slide 13: Thank you for your attention!
Thank you for your attention! 27 November 2012 Investor and Analyst Day 2012 13
Slide 14: Commercial Engines - Growth and Transition
Commercial Engines - Growth and Transition Anton Binder, SVP Commercial Business Munich, 27. November 2012
Slide 15: Managing Growth and Transition
Commercial Engines Managing Growth and Transition 27 November 2012 Investor and Analyst Day 2012 15
Slide 16: Commercial Engines – Key Programs of Transition
Commercial Engines – Key Programs of Transition Narrowbody • V2500 Program (Airbus A320ceo) • GTF Engine Programs • Mitsubishi MRJ, • Bombardier CSeries • Airbus A320neo Widebody • GP7000 (Airbus A380) • GEnx Program (Boeing B787, B747-8) 27 November 2012 Investor and Analyst Day 2012 16
Slide 17: Commercial Engines – Series Revenues V2500
Commercial Engines – Series Revenues V2500 • Volume Increase – same parts • Transition to Neo • Share Increase – new parts Share increase Neo Engine Volume increase V2500 2012 -2013 2015 - 2017 27 November 2012 Investor and Analyst Day 2012 17
Slide 18: Over 2,900 GTF Engines Firm and Option Orders
Over 2,900 GTF Engines Firm and Option Orders PW1100G/ A320neo PW1200G/ MRJ PW1400G/ MS-21 PW1500G/ CSeries Rostekhnologii Undisclosed (4) 27 November 2012 Investor and Analyst Day 2012 18
Slide 19: MTU’s Involvement in the GTF Engine Programs
MTU’s Involvement in the GTF Engine Programs MRJ CSeries A320neo MTU Share 15% 17% 18% LPT LPT 4 HPC LPT Products 4 HPC Brush Seals 4 HPC Brush Seals 2 Nickel Blisk Assy &Test Share Aftermarket Prog. share Prog. share Prog. share 27 November 2012 Investor and Analyst Day 2012 19
Slide 20: Commercial Engines – Series Revenues for GTF Engine Platforms
Commercial Engines – Series Revenues for GTF Engine Platforms • Sales volume increase (2016 comparable to best V2500 year) • New workscope for 3 GTF engine platforms 2012 2016 27 November 2012 Investor and Analyst Day 2012 20
Slide 21: Commercial Engines – Series Revenues of Widebody Engines
Commercial Engines – Series Revenues of Widebody Engines (GP7000, GEnx) • Market share each program > 50% • Sales volume more than doubles • Ramp up of 2 young engine platforms 2012 2016 27 November 2012 Investor and Analyst Day 2012 21
Slide 22: Commercial Engine Business – A Growth Path
Commercial Engine Business – A Growth Path Engine Volumes & Revenues (incl. IAE upshare) 40% of the delivered engine volume in 2016 is from new engines (GTFs) +60% +45% 2012 2013 2014 2015 2016 Engine Volume compared to 2012 % Engine Revenues compared to 2012 % 27 November 2012 Investor & Analyst Da
Slide 23: Commercial Engines – Focus is execution excellence
Commercial Engines – Focus is execution excellence… Stay Close to the Market Keep a Tight Look on Supply Chain Manage Working Capital Keep R&D Efforts on Track 27 November 2012 Investor and Analyst Day 2012 23
Slide 24: Thank you for your attention!
Thank you for your attention! 27 November 2012 Investor and Analyst Day 2012 24
Slide 25: MTU Supply Chain Strategy
MTU Supply Chain Strategy Dr. Rainer Martens, COO Munich, 27. November 2012
Slide 26: Airbus and Boeing Planned Rates Mean +40% Deliveries in 2011-14
Airbus and Boeing Planned Rates Mean +40% Deliveries in 2011-14 MTU OEM Production Increases Simultaneously YoY increase in MTU Engine Module Deliveries +45% Year 2012 2013 2014 2015 2016 27 November 2012 Investor and Analyst Day 2012 26
Slide 27: Challenging Increase in Business – but no Compromise on ….
Challenging Increase in Business – but no Compromise on …. • Airworthiness • On time delivery • Flexibility • Competitiveness 27 November 2012 Investor and Analyst Day 2012 27
Slide 28: Supply Chain – Roadmap for Ramp up
Supply Chain – Roadmap for Ramp up MTU MUC MTU Polska • In house manufacturing concentrating on important and complex products - high degree of automation - 3 shift working model with improved worker efficiency and equipment utilization - investment in infrastructure • Consequent utilization of cost
Slide 29: External Supply Chain Measures
External Supply Chain Measures Capacity Competitiveness • Supplier assessment for A-Supplier • Concentration of critical parts at strategic suppliers • Development supplier become production supplier • Targeting 30% production material procurement volume in low cost countries • Double source of crit
Slide 30: Internal Supply Chain – Strategic Investments in MTU Polska
Internal Supply Chain – Strategic Investments in MTU Polska Parts Repair Special Processes Module Assembly Rotor Components Logistics Airfoil Production Engineering R&D Assembly Parts Repair Rotor Components Airfoils R&D 27 November 2012 Investor and Analyst Day 2012 30
Slide 31: Internal Supply Chain – Strategic Investments in Main Plant Munich
Internal Supply Chain – Strategic Investments in Main Plant Munich Additive manufacturing TCF – Hub Strut Case Blisk manufacturing TCF – Assembly PECM – Ni Blisk mfg. Advanced rotor mfg. TCF - Flow Path Hardware 27 November 2012 Investor and Analyst Day 2012 31
Slide 32: Internal Supply Chain – New Blisk Manufacturing € 50 million
Internal Supply Chain – New Blisk Manufacturing Key Facts • Invest € 50 million • Capacity 3.000 parts p.a. • Improvements • Automation increase • Lead time reduction • Process stability improvement • Efficiency gains 27 November 2012 Investor and Analyst Day 2012 32
Slide 33: New Technology – Additive Manufacturing or Parts out of a „Printer“
New Technology – Additive Manufacturing or Parts out of a „Printer“ Key Facts • Invest 6 machines Beam diameter • Capacity 18.000 hours/year Layer • Improvements • High automation • Engineering lead time reduction • Production lead time reduction • Production cost reduction • Product weight reductio
Slide 34: Summary – Ramp up of Business Drives Change in Supply Chain
Summary – Ramp up of Business Drives Change in Supply Chain • Restructure manufacturing portfolio • Concentrate critical & complex parts in Munich • Concentrate critical & less complex parts in Poland • Increase share of highly automated manufacturing • Introduce new manufacturing technologies • Lev
Slide 35: Thank you for your attention!
Thank you for your attention! 27 November 2012 Investor and Analyst Day 2012 35
Slide 36: The GTF - A Game Changing Concept
The GTF - A Game Changing Concept Dr. Jörg Henne, SVP Engineering & Technology Munich, 27. November 2012
Slide 37: The Concept
The Concept 27 November 2012 Investor and Analyst Day 2012 37
Slide 38: The GTF in Comparison with Direct Drive Turbofans (DDTF)
The GTF in Comparison with Direct Drive Turbofans (DDTF) 2-Spool DDTF 3-Spool DDTF GTF Gas Generator w/ low speed Gas Generator w/ high speed Gas Generator w/ high speed turbo machinery (LPC) turbo machinery turbo machinery Fan speed LPT speed Fan speed LPT speed Fan speed low, LPT speed higher than
Slide 39: The GTF Enables Highest BPR Engines at Lowest Weight
The GTF Enables Highest BPR Engines at Lowest Weight Achieve lowest noise AND fuel burn fewer stages bigger Fan size noi s e DDTF fu e lb lo nt ur gy no ne n GTF ch po te om c lowest weight by high speed LPC & LPT through lowest weight DDTF FPR BPR ~9-10 Fan Size PPS Weight GTF FDGS the enabler for
Slide 40: The GTF Competitive Advantage
The GTF Competitive Advantage Direct Drive Turbofan DDTF GTF relative to Direct Drive Turbofan: 25% less stages Config 1-3-10-2-7 45% less airfoils 78 in Fan Diameter lower cycle temperature = lower maintenance cost higher propulsive efficiency higher low spool component efficiencies sho
Slide 41: The Achievements
The Achievements 27 November 2012 Investor and Analyst Day 2012 41
Slide 42: PW1200G for MRJ & PW1500G for CSeries Test Summary
PW1200G for MRJ & PW1500G for CSeries Test Summary Two Engines of the NGPF-Family Running Ahead of Time of the A320NEO Program ~4000 hours of testing completed including ~460 flight hours. 27 November 2012 Investor and Analyst Day 2012 42
Slide 43: PW1500G Engine Certification on Schedule
PW1500G Engine Certification on Schedule Engine Icing Testing Bird Ingestion Testing PW1000G engine testing: ~4.000 hours Fan Blade Release ~12.000 cycles Demonstration of engine durability & robustness through very successful testing. 27 November 2012 Investor and Analyst Day 2012 43
Slide 44: PW1100G-JM Engine Benefits for A320NEO
PW1100G-JM Engine Benefits for A320NEO The engine will deliver: Fuel Burn -15% CO2 -15% Noise - 50% perceived noise Maintenance Cost less stages/airfoils/LLP First Engine to Test @ Last Bolt Ceremony Oct 26, 2012 Schedule earliest EIS PW1100G-JM the third engine of the NGPF-family will inc
Slide 45: The Potential
The Potential 27 November 2012 Investor and Analyst Day 2012 45
Slide 46: GTF Further Improvement & Application Range
GTF Further Improvement & Application Range Optimization Beyond its Generic Concept Advantage Propulsive Efficiency Light Weight Materials & Design Thermal Efficiency Scale GTF to Higher Thrust The GTF concept is very well suited also for high thrust applications. 27 November 2012 Investor and Analy
Slide 47: Summary & Conclusions
Summary & Conclusions • The GTF is a game changing engine concept that will provide 15% less fuel burn and 50% less perceived noise relative to the V2500 engine • It provides 3% less fuel burn, lower noise and lower maintenance cost relative to today’s competing Direct Drive Turbofan • The Fan Drive
Slide 48: … thank you for your attention
… thank you for your attention 27 November 2012 Investor and Analyst Day 2012 48
Slide 49: Current Trends in MRO Market
Current Trends in MRO Market Leo Koppers, SVP Marketing & Sales, MTU Maintenance Munich, 27. November 2012
Slide 50: Current Market Trends – per November 2012
Current Market Trends – per November 2012 GDP +2.5% +2.2% 2011A 2012E • Economic slowdown, serious risks • Eurozone crisis start to affect BRIC countries Freight traffic -0.7% -0.4% 2011A 2012E • Cargo traffic recovering (+0.6% in Sept) • Structural impact of high fuel prices Passenger tra
Slide 51: Aircraft Utilization Development
Aircraft Utilization Development Global airline flight hours (quarterly) Highlights Aircraft* FH (mill.) Growth rate (y-o-y) • Ongoing growth in utilization although at 18 20% lower level 16 16% • Slowdown in utilization vs. previous prediction: 14 12% - Q3 to grow 2.2% instead of 3% - 2012 +3% inst
Slide 52: Market Indicators per Engine Type
Market Indicators per Engine Type Active Park Flight Engine fleet rate Hours1 Y-O-Y as of 31 October 2012 Ø Airliner engines 37,320 +3.1% 10.4% 2.2% Growth decelerating CF34-3 1,494 -7% 17% -8% Fleet and flight hours in steep decline 50-seater operating costs are too high CF34-8/-10E 2,928 +9% 3
Slide 53: Engine MRO and Shop Visit Cost Reduction Potential
Engine MRO and Shop Visit Cost Reduction Potential MRO DRIVERS OPERATIONS: Measures to defer shop visits* TRIGGER Operational Procedure On-wing Engine Condition Engine swap parameters FOD adjustments maintenance cleaning monitoring (spare engines) (derate take off) (compressor wash) Cycle length LLP
Slide 54: MTU Maintenance Workload Development
MTU Maintenance Workload Development 2012 2013 Workscope Engine trend trend content Ø Commercial engines1 n/a CF34-3 n/a Workload waves driven by customer fleets CF34-8/-10E n/a Fast growing workload CF6-50 HIGH Last commercial visits expected in 2013; stable military work
Slide 55: Commercial Engine MRO Market 2012-22
Commercial Engine MRO Market 2012-22 MRO revenues (b$)1/2 Shop visits1 40 CAGR 2012-22 CAGR 2012-22 World (total): 7.5% 11.000 World (total): 2.0% 35 MTU coverage3 10.0% MTU coverage2 4.7% Other 3.5% 10.000 Other -2.0% 30 9.000 8.000 25 68% 7.000 69% 20 6.000 5.000 15 53% 4.000 Source: ASM per SP13
Slide 56: Market Challenges and Opportunities
Market Challenges and Opportunities Challenges Opportunities • Change of ownership of mature fleets • Better market access and shares Fleet • Decreasing MRO demand for older • Increased competitiveness dynamics engines (retirements of large fleets) (tailored surplus solutions) • Increased surplus •
Slide 57: Impact of New Technology on Engine Life Cycle and MRO Demand
Impact of New Technology on Engine Life Cycle and MRO Demand Narrowbody engine technology – Illustrative scenarios Warranty1 30 yrs SUNSET 1960s – 70s • 9 - 12 shop visits2 • Hardly any OEM-LTSA e.g. JT8D • OEM share <5% MATURE Warranty1 28 yrs 1980s – 90s • 6 - 9 shop visits2 • 15-20% OEM-LTSA e.g.
Slide 58: Current MTU Maintenance Portfolio Positioning
Current MTU Maintenance Portfolio Positioning New / in production fleets Mature fleets Sunset fleets MRO demand +/++ +++ ++ PW2000 CF6-80E V2500-D5 GE90B CFM56 RB211 T500 -5C CF34-8 -535 CF34-3 V2500-A1 T700 PW4 PW4-112’’ CFM56-5A PW4 T800 CF6-80C2 -94’’ AE3007 -100 T800 CFM56 V2500 A5 PW6000 -5B CF
Slide 59: Future MTU Maintenance Portfolio Positioning
Future MTU Maintenance Portfolio Positioning New / in production fleets Mature fleets Sunset fleets MRO demand +/++ +++ ++ CF6-80E GE90G T800 T700 CFM56-7 GE90B PW2000 SaM146 CF34 CF34 CF6- -8 T500 80C2 GP7 -10 V2500-A5 PW4- PW4 PW4-100’’ 112 V2500-D5 -94 GEnX CFM56 RB211 CFM56 RB211 CF34-3 -5C -524
Slide 60: Market Access Options
Market Access Options Independent Airline OEM cooperation Other services MRO Joint Venture RSP Network CF6 CFM56 V2500 CF34 On-site services CFM56 V2500 GP7 LPT PWC Parts repair GE90 GEnx TCF Spare engine support PW2000 PW1000 LRU Mgmt V2500 27 November 2012 Investor and Analyst Day 2012 60
Slide 61: Outlook
Outlook Short to medium term forecast •No impact of utilisation deceleration – workload to increase in 2013 •Growing average shop visit turnover •Challenging market dynamics offer opportunities in terms of market access, competitiveness and profitability MTU Maintenance long-term strategy •Grow orga
Slide 62: Thank you for your attention!
Thank you for your attention! 27 November 2012 Investor and Analyst Day 2012 62
Slide 63: Financials & Summary-Wrap up
Financials & Summary-Wrap up Reiner Winkler, CFO Munich, 27. November 2012
Slide 64: 9M 2012: Group Revenues Increased by 19%
9M 2012: Group Revenues Increased by 19% MTU Group Revenues Segment Revenues in m € in m € +19%* * 1,002 % +25 799 348 +8% 2,468 321 2,067 +18%** 1,142 970 9M 2011 9M 2012 9M 2011 9M 2012 Commercial Business Military Business MRO * on US$ basis +14% * US$ basis +10% ** on US$ basis +7% 27 November 2
Slide 65: 9M 2012: Group EBIT adj. Increased by 13%
9M 2012: Group EBIT adj. Increased by 13% MTU Group EBIT adj. Segment EBIT adj. in m € in m € 14.1% 11.9% 13.0% 11.3% 8.5% 8.3% +13% % 86 +30 66 278 +7% 245 182 194 9M 2011 9M 2012 9M 2011 9M 2012 Group margin OEM MRO OEM margin MRO margin 27 November 2012 Investor and Analyst Day 2012 65
Slide 66: Guidance 2012 Confirmed
Guidance 2012 Confirmed in m€ FY 2011 Guidance 2012 Revenues 2,932 3,300 EBIT adj. 328 370 EBIT adj. Margin 11.2% Net income adj. 196 225 • Commercial series sales up 10% • Commercial spare parts flat • Commercial MRO up 5% -10% (upper end) • Military business up 5% • Decrease in research & developm
Slide 67: IAS 19 Revised: Impact on Pension Provisions and Equity
IAS 19 Revised: Impact on Pension Provisions and Equity • Abolishment of „Corridor Approach“ • Actuarial gains and losses have to be recognised in other comprehensive income (OCI) • Change in discount rate for pension provisions (actual lower interest rates lead to higher DBO value) Impact on bala
Slide 68: IAS 19 Revised: Impact on Pension Provisions and Equity
IAS 19 Revised: Impact on Pension Provisions and Equity Pension provision will be increased by actuarial losses Pension provisions Expected DBO Dec 31, 2012 „corridor method“ € 485 m Actuarial losses from previous years € 76 m New actuarial losses – due to change in discount rate to ~ € 80 m ~ 3.5%
Slide 69: Cash Deployment
Cash Deployment € 6 bn revenue target by 2020 FCF development 6.000 Growth target: 5.000 • Revenue target of € 6bn by 2020 4.000 • EBIT mid-long term target 12-14% 3.000 2.000 CF short to mid term - headwinds: 1.000 • Higher inventories due to ramp up of new 0 engine programs (GP7000, GEnx, GTF) 201
Slide 70: Priority List of Cash Flow Use
Priority List of Cash Flow Use 1) Invest in Organic Growth 2) Dividend increase 3) M&A transactions 4) Share Buy-back Options ranked based on priority – considering: • Benefit/ positive contribution • Probability • Cash Impact 27 November 2012 Investor and Analyst Day 2012 70
Slide 71: Priority List of Cash Flow Use
Priority List of Cash Flow Use 1) Invest in Organic Growth 3) M&A transactions • Com. OEM: B777x, further GTF applications • Strict financial and strategic M&A criteria: • Military: New helicopter engine • ROCE > WACC • MRO: New JV in Emerging Markets • No EPS dilution • Maintain Investment Grade Ra
Slide 72: EBIT adj. Head- and Tailwinds 2013
EBIT adj. Head- and Tailwinds 2013 • IAE-upshare: € 250m* revenues with mid - high single digit EBIT margin • New engines sales up in mid teens ** • Spare parts up high single digit ** • Commercial MRO up high single digit • Military revenues flat • R&D slightly down • No FX impact (based on ø $/€ 1
Slide 73: Summary & Wrap up
Summary & Wrap up • MTU is on track to achieve € 6bn revenue target by 2020 • MTU´s supply chain is well prepared to manage ramp up • MTU continues to invest into GTF technology targeting further applications / thrust ranges • MTU MRO is well positioned to profit from current market dynamics • MTU´s
Slide 74: Thank you for your attention!
Thank you for your attention! 27 November 2012 Investor and Analyst Day 2012 74