MTU Aero Engines AG · XETR:MTX
MTU Aero Engines — Investor Presentation (March 2017)
50 slides from MTU Aero Engines's investor presentation, March 2017
Slide 1: Company Presentation MTU Aero Engines AG
Company Presentation MTU Aero Engines AG March 2017 – Investor Relations
Slide 2: Contents
Contents 1. Company Overview 5. Financials & Outlook 2. Commercial OEM Business 6. Corporate Responsibility 3. Military OEM Business 4. Commercial MRO Business
Slide 3: Contents
Contents 1. Company Overview 5. Financials & Outlook 2. Commercial OEM Business 6. Corporate Responsibility 3. Military OEM Business 4. Commercial MRO Business
Slide 4: MTU is Built on Three Pillars
MTU is Built on Three Pillars Commercial Business Military Business Commercial MRO • Risk and revenue sharing partner • Capability to develop and • World's largest independent with major OEMs manufacture entire engines engine MRO provider • Focus on Low-Pressure Turbines, • R&D is typically customer
Slide 5: Key Investment Highlights
Key Investment Highlights Attractive Growth outlook • Revenues expected to double from 2010 to 2020 • Well underpinned by a strong order book and a passenger traffic growth trend Strong market position • PW800 strengthens position in the future business jet market • PW1000G engines dominate future r
Slide 6: Long Term Outlook 2014 – 2025
Long Term Outlook 2014 – 2025 Investment Phase 2014 – 2017 Consolidation Phase 2018 – 2025 Revenues Military: Military: Com. OE: Com. OE: Com. Spares: Com. Spares: Com. MRO: Com. MRO: EBIT adjusted Growth in line with revenues Growth stronger than revenues Net Income adj. Growth stronger than EBIT a
Slide 7: Contents
Contents 1. Company Overview 5. Financials & Outlook 2. Commercial OEM Business 6. Corporate Responsibility 3. Military OEM Business 4. Commercial MRO Business
Slide 8: Overview of Aero Engine Industry Players
Overview of Aero Engine Industry Players Key Market Participants in Large Engine Business OEMs Engine sub-system (module) providers * *former Volvo Aero Engine component suppliers Material suppliers Aero Engine Industry Characteristics • High barriers to entry • Industry players are specialized in
Slide 9: Balanced Product Portfolio
Balanced Product Portfolio MTU‘s Engine Portfolio is Well Balanced Between Young and Mature Programs Life Cycle Cash Flow Profile of Commercial MTU Engines (A300, A310, (MD-80) Entry into Service 747, 767) CF6-50 PW JT8D- /80A 2000 200 CF6 -80C (747, 767, A300, PW 2000 A310, DC-10) V2500 (757, C-17)
Slide 10: MTU’s Continuous Growth is Supported by all Market Segments
MTU’s Continuous Growth is Supported by all Market Segments OEM market volume ($bn) 140 CAGR Aircraft CAGR 2016-2026 Segment* 120 Total market Mid to high single digit 100 Mid single digit Widebody (50-120 klb) 80 60 Mid single digit Narrowbody (20-50 klb) 40 20 High single digit Regional jet (13-24
Slide 11: Business Jet Market
Business Jet Market PW300 / PW500 PW800 • Installed base of more than 7,600 engines • Program share of 15% • 10 business jet applications in operation • Exclusive engine for future Gulfstreams • Successful market introduction of Cessna • MTU will be responsible for the LPT, the first four Latitude s
Slide 12: Regional Jet Market
Regional Jet Market PW1200G (MRJ) PW1500G (CSeries) PW1700G/1900G (E2-Jets) • Program share of 15% • Program share of 17% • Program share of 15-17% • Exclusive engine for MRJ • Exclusive engine for the • Exlusive engine for with seats up to 92 Bombardier CSeries Embraer‘s 2nd Gen E-jets passengers •
Slide 13: Regional Jet Market: GTF Engines will Dominate
Regional Jet Market: GTF Engines will Dominate Market change towards PW1000G engines Deliveries: CF34: PW1000G: 91 % 90 % Other Jets Other Jets Today: CF34 dominated Future: PW1000G dominated CRJ700/ 900 EMB170 / 190 / 195 CSeries MRJ70 / 90 EMB175 / 190 / 195-E2 EIS: 2001/2004 2004/2006 today 2016
Slide 14: Narrowbody Market
Narrowbody Market V2500 PW1100G-JM • ~ 6,000 engines flying • Strong order book • Most important program w.r.t. revenue • 16% improved fuel efficiency contribution • Designed for lower maintenance cost • Strong growth of spare parts sales until mid of • ~50% market share on A320neo family in total n
Slide 15: Widebody Market
Widebody Market GP7000 GEnx GE9X • Market share of ~ 50% on the • Market share of 60% on 787, • Revenue potential 4 bn€ A380 exclusive on 747-8 • 950 orders and options • In production since 2007 • In production since 2011 • Entry into service expected in • ~ 500 engines in service • ~ 1000 engines
Slide 16: Production Ramp Up
Production Ramp Up 2009 2015 2020 Turbines 800 1150 1850 Compressors 200 320 1580 Turbine Center 30 380 350 Frame Engine 30 110 290 Assembly +10 % +15 % Total 1060 Yearly increase 1960 Yearly increase 4070 MTU faces a steep increase in commercial engine business 16 © MTU Aero Engines AG. The informa
Slide 17: Strategic Setup Production and Supply Chain
Strategic Setup Production and Supply Chain High Tech Mid-Low Tech Raw Material, Mid-Low Tech MTU AE Munich MTU AE Polska Supplier • Sophisticated parts and • Adopting established parts and • Raw parts production processes production lines from Munich • Finished parts as second source • Automation •
Slide 18: Key Projects for Production ramp-up in Operation
Key Projects for Production ramp-up in Operation New blisk shop Optimize rotor and stator production lines Progress status Progress status In operation In operation Extension of MTU-AE Polska Engine assembly Progress status Progress status In operation In operation Logistics building Shop floor mana
Slide 19: Geared Turbofan Production Ramp up: Target costs and Achievements
Geared Turbofan Production Ramp up: Target costs and Achievements Unit costs • Quality is at a high level: Production target Production and supplier costs after challenges have been fixed End of 2016 250 engines • Volume is increased step by step • Lead times are on track • Actual costs are within t
Slide 20: Commercial OE: Growth Secured with Extensively Filled Order Books and Stronger Diversification
Commercial OE: Growth Secured with Extensively Filled Order Books and Stronger Diversification Today (2015) Future (2025) Other Business Jet Other Business Jet CAGR Wide- Regional ~ mid-single body Jet Wide- Narrow- body body digit Narrow- body • 3/4 of our Com OEM revenue is generated by • Transiti
Slide 21: Com. Spare Parts: Strong Growth of New Engine Programs
Com. Spare Parts: Strong Growth of New Engine Programs Lead to a More Diversified Product Portfolio and Growth in all Segments Today (2015) Future (2025) Other Business Jet Regional Jet Other Business Jet CAGR Widebody Wide- Narrow- ~ high-single body body digit Narrowbody • 2/3 of Com Spare Parts r
Slide 22: Contents
Contents 1. Company Overview 5. Financials & Outlook 2. Commercial OEM Business 6. Corporate Responsibility 3. Military OEM Business 4. Commercial MRO Business
Slide 23: Military Business
Military Business EJ200 TP400-D6 T408 • Strong revenue contribution, • Ramp up successfully • Power for CH-53K for US both OEM&MRO achieved marine corps • ~ 500 Eurofighter in service • ~ 200 engines produced • Latest Technology Turboshaft • ~ 1,200 engines delivered • 174 A400M aircraft on order en
Slide 24: Aftermarket Support for Long Living Equipment will Lead to a Stable Military Business
Aftermarket Support for Long Living Equipment will Lead to a Stable Military Business with Upside Potential from Export Campaigns Today (2015) Future (2025) After CAGR After market/ Series market/ Series ~ stable services services • EJ200 is the main revenue driver – series revenue • EJ200 series re
Slide 25: Contents
Contents 1. Company Overview 5. Financials & Outlook 2. Commercial OEM Business 6. Corporate Responsibility 3. Military OEM Business 4. Commercial MRO Business
Slide 26: MTU’s Diversified Approach Ensures a Broad MRO Market Coverage
MTU’s Diversified Approach Ensures a Broad MRO Market Coverage 1 Independent 2 OEM cooperation 3 Airline cooperation • Over 700 customers (airlines, • MTU is OEM network partner • JV with China Southern MROs, lessors…) • MRO share is secured at • JV with Lufthansa Technik • #1 independent for engine
Slide 27: MTU’s MRO Portfolio is the Basis for Future Growth
MTU’s MRO Portfolio is the Basis for Future Growth MRO Market Volume ($bn) 60 CAGR Market Approach Portfolio CAGR 2015-25 Total Market High single digit 50 MTU-served Low teens Mid No access as single – of today 40 digit 30 High Independent CF34, CFM56, single or Airline CF6, GE90G, 20 digit Coopera
Slide 28: Independent Business
1 Independent Business Market Trends Characteristics MTU Positioning • Market CAGR ~8 % over • Direct customer contact • Largest MRO portfolio, next 10 years • Highly competitive market #1 independent • Increasing demand for with strong price and • Full service provider incl. integrated solutions pe
Slide 29: MRO’s Independent Engine Portfolio: Beyond MTU’s OEM
1.1 MRO’s Independent Engine Portfolio: Beyond MTU’s OEM Portfolio Additional Attractive Engine Types are Covered CF34 CFM56 GE90-110 / -115B • ~ 7,000 engines flying • ~ 20,000 engines flying • ~ 1,800 engines flying; • Exclusive power plant for • Strong MRO growth strong MRO growth current regiona
Slide 30: OEM Cooperation
2.2 OEM Cooperation Market Trends Characteristics MTU Positioning • Increasing OEM market • OEM is contract holder • OEM program share secures coverage • Long term deals with focus on MRO workload for decades • OEM-FHA share has grown reducing life-cycle cost • Standardization of up to 40 % • Compet
Slide 31: Airline Cooperation
3.3 Airline Cooperation Market Trends Characteristics MTU Positioning • 60 % of global order books • Partners provide baseload • Local presence with high come from emerging markets volume and access to MTU quality standards • Strong growth young airlines licences • Activities in low-cost labor with
Slide 32: MTU Maintenance Zhuhai – A Success Story
3 MTU Maintenance Zhuhai – A Success Story Joint Venture with China Southern Air Holding* Company Key Facts Financial Overview • 50:50 joint venture since 2001 Revenues (m $) Shop visits (2015) • Portfolio: V2500-A5, CFM56-3/5B/7 17% 18% future potential: PW1100G-JM, LEAP CAGR ~700 46% Asia 14% • Ca
Slide 33: All Market Channels Contribute to Strong MRO Revenue Increase
All Market Channels Contribute to Strong MRO Revenue Increase Today (2015) Future (2025) Airline cooperation Independent Airline cooperation CAGR OEM ~ 10 % cooperation incl. MTU Zhuhai OEM Independent w/o MTU Zhuhai cooperation high single digit* • V2500 as combination of all 3 channels • OEM progr
Slide 34: Contents
Contents 1. Company Overview 5. Financials & Outlook 2. Commercial OEM Business 6. Corporate Responsibility 3. Military OEM Business 4. Commercial MRO Business
Slide 35: Guidance 2017
Guidance 2017 Military: Down high single digit New engine Sales (Com. OE): Up high single digit Spare parts Sales (Com. Spares): Up mid single digit Commercial MRO: Up ~10% Revenues ~ 5.1 – 5.2 bn € Tailwind from US$ fx-rate Slight headwind from business mix EBIT adj. Stable margin Lower interest ex
Slide 36: US$ Exchange Rate / Hedge Portfolio
US$ Exchange Rate / Hedge Portfolio Hedge book as of February 23, 2017 (% of net US$ exposure) Hedging Model US$ Exposure in mUS$ • Approx. 75% of US$ revenues are covered with US$ costs via 948 procurement (“natural hedging”). (= 78%) • US$ sensitivity will rise over the 650 next years due to incre
Slide 37: MTU’s cash deployment strategy
MTU’s cash deployment strategy Investment phase Consolidation phase Prio Instrument 2014-17 2018 - 25 Investment in Strong investment Limited I organic growth in new programs opportunities Dividend Growth in line with Growth stronger II deployment net income than net income Share buyback No buyb
Slide 38: Contents
Contents 1. Company Overview 5. Financials & Outlook 2. Commercial OEM Business 6. Corporate Responsibility 3. Military OEM Business 4. Commercial MRO Business
Slide 39: Corporate Responsibility
Corporate Responsibility • Sustainable business practices Compliance, corporate governance, risk management, ratings & rankings • Environmental protection MTU climate strategy, environmental management on the shop floor • Product responsibility Eco-efficient engines / Clean Air Engine, sustainable p
Slide 40: Appendix
Appendix
Slide 41: FY 2016: Group Revenues up 7%
Appendix FY 2016: Group Revenues up 7% MTU Group Revenues Segment Revenues in m € in m € 4,733 1,914 4,435 1,581 483 +4% 504 2,414 -1%** 2,401 FY 2015 FY 2016 FY 2015 FY 2016 Commercial Business Military Business MRO * MRO (on US$ basis ): up 23% ** Commercial OEM US$ revenues down by a low single d
Slide 42: FY 2016: Group EBIT adj. Margin at 10.6%
Appendix FY 2016: Group EBIT adj. Margin at 10.6% MTU Group EBIT adj. Segment EBIT adj. in m € in m € 10.6% 11.1% 9.8% 9.9% 9.8% 9.5% 503 182 440 155 322 285 FY 2015 FY 2016 FY 2015 FY 2016 Group margin OEM MRO OEM margin MRO margin 42 © MTU Aero Engines AG. The information contained herein is propr
Slide 43: MTU‘s Credit Ratings Represent Investment Grade
Appendix MTU‘s Credit Ratings Represent Investment Grade MTU is rated by two credit rating agencies: Moody‘s (Long term) Baa3 negative outlook 29. April 2016 Fitch (Long term) BBB- stable outlook 08. September 2015 Loan Details Amount Coupon Issue date Maturity 0.125% Convertible Bond 500 m€ 17 May
Slide 44: Development milestones of GTF, PW800, GE9x and T408
Development milestones of GTF, PW800, GE9x and T408 PW1500G PW1100G PW1200G PW1400G PW1900G PW800 GE9x T408 C Series -JM MRJ MS-21 2nd Gen G500 / B777x CH-53K A320neo E-Jets G600 First engine to test Tested in flying N/A 2017 N/A testbed Engine certifica- tion 2017 20
Slide 45: The GTF Competitive Advantage
Appendix 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 efficie
Slide 46: Commercial Engine Fleet
Appendix Commercial Engine Fleet Aircraft Segment Engine Program Share Aircraft Application Widebody GP7000 22.5% A380 (50 – 120 klb)* PW4000G 12.5% B777 CF6-80C 9.1% B747-400, B767, Boeing MD-11, A310 Genx 6.6% B787 Dreamliner, B747-8 CF6-80E n.n. A330 CF6-50/80A n.n. DC 10-30, B767, A310 GE9X 4% B
Slide 47: Military Engine Fleet
Appendix Military Engine Fleet Aircraft Segment Engine Program Share Aircraft Application Fighter EJ200 30 % Eurofighter Typhoon Aircraft RB199 40 % Panavia Tornado F414 4.4 % F414: F/A-18 E/F Super Hornet; EA-18G Growler Transport TP400 22.2 % A400M Aircraft Helicopter MTR390 40 % Eurocopter Tiger
Slide 48: Commercial MRO Business: Top Engine MRO Providers
Appendix Commercial MRO Business: Top 10 Engine MRO Providers 2015 – Estimated Number of Engines under Contract MTU Maintenance is the largest independent and under the Top 5 MRO providers TOP 10 MRO providers* MRO Provider Market Share 1. GE Engine Services ~22 % 2. Rolls-Royce ~11 % 3. MTU Mainten
Slide 49: Financial Calendar 2017 & IR Contact
Appendix Financial Calendar 2017 & IR Contact February 23, 2017 April 28, 2017 October 26, 2017 Conference Call Conference Call Conference Call Full year results 2016 Q1 2017 results Q3 2017 results 2017 May 4, 2017 July 28, 2017 December 12, 2017 Annual General Meeting Conference Call Investor & An
Slide 50: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could
MTU Aero Engines — Investor Presentation (March 2017) on 6ix