Mtu Aero Engines Ag · XETR:MTX
Mtu Aero Engines — Investor Day (November 2022)
75 slides from Mtu Aero Engines's investor day presentation, Nov 17, 2022
Slide 1: MTU Aero Engines – Investor & Analyst Day 2022
INVESTOR & ANALYST DAY 2022 MTU Aero Engines – Investor & Analyst Day 2022 17th of November 2022 I London
Slide 2: Welcome
Welcome Thomas Franz Vice President Investor Relations Investor & Analyst Day / November 17, 2022 2
Slide 3: Agenda
Agenda 1 Market Environment Reiner Winkler Chief Executive Officer (CEO) 3 Production & Technology Lars Wagner Chief Operating Officer (COO) 5 Executive Summary 2 Business Segments Michael Schreyögg Chief Program Officer (CPO) 4 Financials Peter Kameritsch Chief Financial Officer (CFO) 6 Q&A Reiner
Slide 4: Market Environment
Market Environment Reiner Winkler Chief Executive Officer (CEO) Investor & Analyst Day / November 17, 2022 4
Slide 5: Market environment is challenging
Market environment is challenging Covid-19 pandemic and Global economic slowdown remaining travel restrictions and price inflation Russian invasion of Ukraine Supply chain constraints and and related sanctions labour shortage Energy supply crunch in Europe Ongoing climate discussion and global rise
Slide 6: Impact of Russia's invasion of Ukraine on air traffic is limited
The impact of Russia’s invasion of Ukraine on air traffic is limited in region and scale Sanctions bring challenges to the aviation industry GLOBAL COMMERCIAL FLEET INTERNATIONAL TRAFFIC OVER I Sales of aircraft, spares and MRO services to Russian AFFECTED RUSSIAN AIRSPACE IN 2021 companies are proh
Slide 7: Energy supply crunch and fuel prices have limited implications for aerospace
The energy supply crunch in Europe and the global rise in fuel prices have negative but still limited implications for the aerospace industry Energy supply shock in Europe Impact on aerospace companies I Natural gas prices nearly double pre-war levels I Cost base impact limited at present I EU plans
Slide 8: Fuel prices and inflation forecast to peak in 2022-23
Fuel prices and inflation forecast to peak in 2022-23 AVERAGE ANNUAL OIL PRICE DEVELOPMENT [BRENT USD/BBL] I Oil prices remain elevated following sanctions applied to Russian oil 120 100 I Slowdown in demand with concerns over recession risks 80 Oil Price 60 has pushed Brent under USD 90/bbl in Sept
Slide 9: Lower GDP forecasts but easing travel restrictions drive traffic growth
Economists have significantly lowered global GDP forecasts but the current easing of travel restrictions is most powerful driver for traffic growth GLOBAL ECONOMIC GROWTH PASSENGER TRAFFIC GROWTH 55 120 4.1% 100.3% 100 96.1% 4 3.0% 80 33 2.6% 2.8% 2.6% 2.7% 2.7% 60 22 1.7% 40 28.1% 1 1 16.1% 20 8.7%
Slide 10: Traffic recovery is strong, led by North America and Europe
The traffic recovery is indeed strong, led by North America and Europe Narrowbody flights recover faster TOTAL PAX FLIGHT CYCLES BY REGION NARROWBODY & WIDEBODY PAX FLIGHT CYCLES 120% 120% 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 19-Q4 20-Q1 20-Q2 20-Q3 20-Q4 21-Q1 21-Q2 21-Q3 21-Q4 22-Q1 22-
Slide 11: Dedicated cargo flights outperforming passenger flights
Dedicated cargo flights outperforming passenger flights WEEKLY FLIGHT CYCLES COMPARED TO SAME WEEK IN 2019 I Dedicated cargo flights at 30% above pre-Covid levels and relatively stable 60% I This is despite negative overall freight traffic growth rates (incl. belly cargo) since March as reported by
Slide 12: Aircraft storage declines as airlines re-activate aircraft
Aircraft storage declines as airlines re-activate aircraft to meet stronger travel demand No step up in retirements yet but pick-up likely to be imminent INDUSTRY PARK RATE I Decreasing park rate of Airbus and Boeing aircraft, now at 16% following a peak of 30% in 2020 10,000 10.000 40% 30,1% 8,000
Slide 13: OEMs plan to accelerate deliveries after supply chain constraints
OEMs plan to accelerate deliveries after overcoming current supply chain constraints Growing demand for A220, A320, 767 and 777X with stable 787 order backlog Monthly 2019 Current rate Airframer Trend Aircraft firm 09/2021 Deliveries Net orders* 09/2022 Trend rate planned rate order backlog A220 4 6
Slide 14: Long-term fundamentals for the aerospace industry remain intact
Long-term fundamentals for the aerospace industry remain intact Positive market environment for the aviation industry 20-year annual 20-year annual RPK2) 20-year annual CTK3) 20-year new aircraft GDP growth 2.5%1) traffic growth 3.5%1) traffic growth 3.2% deliveries 42,700 Solid new aircraft deliver
Slide 15: Questions & Answers
Questions & Answers Reiner Winkler Q&A Chief Executive Officer (CEO) Investor & Analyst Day / November 17, 2022 15
Slide 16: Business Segments
Business Segments Michael Schreyögg Chief Program Officer (CPO) Investor & Analyst Day / November 17, 2022 16
Slide 17: MTU is back on its growth track
MTU is back on its growth track Investor & Analyst Day / November 17, 2022 17
Slide 18: Resilience in business model as proven in previous crisis years
Resilience in business model as proven in previous crisis years 2020 – 2021 2022+ Corona crisis Accelerating recovery but economic weakening I Worldwide air traffic significantly down I Full recovery of air traffic expected for 2024/2025 I Narrowbody and cargo fleet more resilient I Production rate
Slide 19: German defense budget continuously increased
German defense budget continuously increased GERMAN DEFENSE BUDGET DEVELOPMENT 2014 – 2022 1) IN BILLION EUR I Germany strengthens its defense capabilities supported by EUR 100bn special funds EUR 100bn special funds I Higher availability and more intensive use of weapon systems 100 I Stabilization
Slide 20: Solid military engine portfolio
Solid military engine portfolio FCAS CH-53K Eurocopter Tiger Tornado NEFE T408 MTR 390 RB199 EIS ~2040 EIS 2021 EIS 2004 EIS 1979 A400M Eurofighter Next Gen Helicopter TP400-D6 EJ200 Year 0 40-50 years Entry into service in service EIS 2013 EIS 2003 R&D Series Production Aftermarket Phase out Invest
Slide 21: EJ200 remains the backbone of military business
The EJ200 will remain the backbone in our military business with further upside potential DELIVERED EJ200 ENGINES AND FORECAST 9 nations > 1.5 m have chosen the engine flying 1,800 1800 Eurofighter hours1) 1,600 1600 I Eurofighter additional new orders of 58 aircraft 1,400 1400 by Germany and Spain
Slide 22: Confident about FCAS and participation in NEFE
We remain confident about the FCAS1) and our participation in the NEFE2) ~ 2,000 ~ 500 THE FCAS IS KEY TO EUROPEAN SOVEREIGNTY IN THE 21ST CENTURY engines engineers at expected MTU needed I Rafale and Eurofighter replacement I Further enhancement of technology competencies I Establish and expand own
Slide 23: MTU's future growth is driven by narrowbody engines
MTU’s future growth is driven by narrowbody engines COMMERCIAL ENGINE FLEET WITH MTU PARTICIPATION 2022-2030 NEW ENGINE DELIVERIES 2022-2030 ~ 9,000 ~ 2,100 ~ 450 23,100 Passenger narrowbody Passenger widebody Cargo and government CAGR engine deliveries engine deliveries applications engine deliveri
Slide 24: V2500 will remain key revenue driver in aftermarket
V2500 will remain key revenue driver in aftermarket business over the next years A320CEO WITH V2500 - ENTRY INTO SERVICE AND SV* (NUMBER OF AIRCRAFT) > 3,000 > 280 million Aircraft equipped Flight hours1) with V25001) 2nd SV yet to come I Strong recovery from the pandemic 400 I Pax-to-freighter conv
Slide 25: The GTF engine is a very popular engine
The GTF engine is a very popular engine, as it offers best economics for airline customers TIMELINE OF THE GTF ENGINE 2010 – 2015 2016 - 2019 2020 - 2021 2022 + Investment, R&D phase Production ramp up Corona pandemic Re-ramp up starts I Outstanding efficiency in fuel I Steep ramp up I Severe impact
Slide 26: GTF will be key revenue and profit driver by end of decade
GTF will be the key revenue and profit driver by end of this decade GTF ENGINE DELIVERY 2015 – 2030 (PW1100, PW1500, PW1900) 1) > 10,000 Engine deliveries* >1,000 GTF deliveries p.a. I Improvement in pricing (2020-2021) Covid-19 crisis I Lower warranty costs I Learning curve effects EIS 2015 PW1100G
Slide 27: Strong engine product portfolio to benefit from aftermarket
MTU has a strong engine product portfolio to benefit from the aftermarket PW2000 (B757, C17) 1) CF6-80C/E (767, 747, A330) 1) GENX (787, 747-8) 1) SPARE PARTS REVENUE SPLIT Installed engines Installed engines Market share 13% ~ 30% ~ 40% ~ 33% 48% BizJet, others civil (757) passenger Trent 1000 NB ~
Slide 28: MTU Maintenance weathered the Covid-19 storm
MTU Maintenance weathered the Covid-19 storm and continues to perform above average MRO REVENUES 2019 -2024 INCL. REVENUE MTU ZHUHAI (IN USD MILLION) I Pre-Covid revenue levels already reached in 2021 I Corona crisis well managed thanks to narrowbody and cargo exposure, high flexibility and quick re
Slide 29: Flight hours recovery and pent-up demand drive shop visits
Recovery in flight hours and MRO pent-up demand drives shop visits MRO CAPACITY DEMAND I Strong air travel demand I Pent-up demand for MRO shop visits Best-cost > 60% I Supply chain and workforce constraints 1.600 1.400 I Investment programs continued during Covid crisis 1.200 I Increase of flexibil
Slide 30: Expansion of global MRO network is progressing
Expansion of our global MRO network is progressing MTU Maintenance Canada MTU Maintenance Zhuhai (JV) Move to new facility 2021 Shop expansion 2021 MTU Maintenance Zhuhai #2 (JV) New shop 2024 MTU Maintenance Hannover MTU Maintenance Ludwigsfelde MTU Maintenance Serbia EME Aero (JV) ASSB Airfoil Ser
Slide 31: MTU Maintenance Zhuhai ensures network competitiveness
MTU Maintenance Zhuhai ensures network competitiveness and local market access HIGHLIGHTS OF MTU MAINTENANCE ZHUHAI ZHUHAI: ASIA’S LARGEST ENGINE MRO SHOP ~ EUR 1bn Shop load 1) Revenues in 2021 by operator in 2021 China 450 RoW Southern 38% I 50:50 JV with China Southern, largest airline group in A
Slide 32: Additional repair capacities in Serbia support growth
Additional repair capacities in Serbia will support our growth strategy HIGHLIGHTS OF MTU SERBIA SERBIA: PARTS REPAIR COMPETENCE CENTER EUR 130m MTU Serbia is located in Nova Pazova, 25 km Investment away from Belgrade International airport 470,000 I 100% subsidiary of MTU Aero Engines Repair hours
Slide 33: MTU Maintenance Lease Service's portfolio
MTU Maintenance Lease Service’s portfolio ideally complements our engine MRO portfolio HIGHLIGHTS SPECIALIST FOR LEASING AND ASSET MANAGEMENT 50+ 300+ Employees worldwide Customers worldwide 80+ 160+ Lease engines Lease transitions p.a. I Founded in 2014, now fully MTU-owned MLS REVENUES - CAGR ~44%
Slide 34: Strengthening MRO market presence
MTU is working consistently to further strengthen its MRO market presence Secure market access Expansion of product portfolio Presence in key markets Increase competitiveness I Further increase independent I Expansion of existing and I Expansion of global MRO network I Digitalization and process MRO
Slide 35: MTU emerged stronger out of the crisis
MTU emerged stronger out of the crisis and continues its growth path I Military business remains a stable pillar with fighter engines as key revenue drivers I Recovery in aviation industry is accelerating despite challenges in the market environment I Faster recovery thanks to strong exposure in nar
Slide 36: Questions & Answers
Questions & Answers Michael Schreyögg Chief Program Officer (CPO) Q&A Investor & Analyst Day / November 17, 2022 36
Slide 37: Lunchbreak
Lunchbreak Investor & Analyst Day / November 17, 2022 37
Slide 38: Production & Technology
Production & Technology Lars Wagner Chief Operating Officer (COO) Investor & Analyst Day / November 17, 2022 38
Slide 39: Supply Chain & Production
Supply Chain & Production Investor & Analyst Day / November 17, 2022 39
Slide 40: Procurement & logistics: global footprint
Procurement & logistics: global footprint ~ EUR 500m volume in production material in 2022* Security of supply for key raw materials and parts I Main raw-materials demands in titanium, nickel, aluminum Germany Asia I Long term contracts with alloy and part suppliers were 132 suppliers signed to secu
Slide 41: Procurement & logistics strategy
Procurement & logistics strategy COMPETITIVENESS TECHNOLOGY SUPPORT SUPPLIER RELATIONS I Multi-source-strategy I Early participation in development phase I Long-term contracts: best cost sourcing I Smart make-or-buy strategy I Increased focus on product design I Digital supplier network producibilit
Slide 42: Circular economy in raw materials supply chain
Circular economy: sustainability within the supply chain of raw materials We return alloy chips to the supply chain and by this build up a sustainable way to secure the supply Example: process for titanium chips (MTU ownership) Key facts Benefits Sustainable process I MTU has a contract for titanium
Slide 43: Ensuring ramp-up in the end2end value stream
How to ensure the ramp-up in the end2end value stream MTU has used the time during Covid crisis to prepare for the re-ramp-up Raw material Supplier Production Customer I Longterm securing of raw material I Workshops at suppliers to ensure I Introduction of a highly scalable I Increased transparency
Slide 44: OEM global footprint – target vision for manufacturing sites
OEM global footprint – target vision for future manufacturing sites Target set-up I Development/compliance hardware Labour cost per hour OEM Munich: and pre-series Renewed infrastructure I High-tech procedures 2021 and competences I Military programs 2035 GEN2/NEFE/FFC* I Highly automated production
Slide 45: Sustainability@MTU
Sustainability@MTU Investor & Analyst Day / November 17, 2022 45
Slide 46: ESG@MTU
ESG@MTU MTU committed to the UN Sustainable Clear commitment towards sustainable Development Goals products and sustainable production ESG criteria anchored in management MTU advocates diversity and compensation equality of opportunity Monitoring and improvement measures MTU stands for excellent wor
Slide 47: EcoRoadmap for a sustainable production
EcoRoadmap for a sustainable production 60% CO2 reduction by 2030 according to Paris climate agreement Since 2018: Since 2021: Since 2022: 2023 onward: Sustainability measures Project Zero for waste climate neutral production climate neutral production further measures for CO2 additionally support r
Slide 48: Dependency of MTU's sites on gas
Dependency of MTU’s sites on gas Gas usage at MTU Security of supply Energy costs I Sustainability measures support independence I Heating resources at German sites for I Gas/energy prices for hedged amounts in from gas winter 2022/2023 already secured 2023 at moderate level I Additional measures fo
Slide 49: Innovative Engine Concepts
Innovative Engine Concepts Investor & Analyst Day / November 17, 2022 49
Slide 50: Energy sources for emission-free aviation
Energy sources for emission-free aviation IMPORTANCE OF SAF* FOR NEAR- AND LONG-TERM CLIMATE PROTECTION IMPORTANCE OF HYDROGEN AS CLEANEST ENERGY CARRIER Near-term Long-term I Drop-in application in existing fleet with imminent impact on climate I “Green” hydrogen has largest potential for zero emis
Slide 51: Engine concepts for emission-free aviation
Engine concepts for emission-free aviation 2ND GENERATION GEARED TURBOFAN WET CONCEPT FLYING FUEL CELL I Reduced fan pressure ratio and higher overall I Gas-turbine with steam injection into the I A galvanic cell transforms chemical energy pressure ratio combustion chamber from H2 and O2 into electr
Slide 52: Questions & Answers
Questions & Answers Lars Wagner Chief Operating Officer (COO) Q&A Investor & Analyst Day / November 17, 2022 52
Slide 53: Financials
Financials Peter Kameritsch Peter Kameritsch | Chief Financial Officer (CFO) | Chief Information Officer (CIO) Investor && Analyst Analyst Day Day// November 17, 17, 2022 2022 53
Slide 54: Challenges & opportunities in current environment
Challenges & opportunities in current environment Investor && Analyst Analyst Day Day// November 17, 17, 2022 2022 54
Slide 55: Sourcing environment in light of current price inflations
Sourcing environment in light of current price inflations Well positioned to deal with current trends ILLUSTRATION OF SUPPLIER PRICING IN A MULTI SOURCE STRATEGY Contract duration (Illustration) Supplier 1 Contract 1 Contract 2 Supplier 2 Contract 1 Contract 2 Contract 3 Contract 4 Supplier 3 Contra
Slide 56: MTU's cost development versus spot market
MTU's cost development versus spot market CONTRACTUAL FRAMEWORK INCOMING COST – CONTRACTED COST VS. INDEX/SPOT PRICES Effective cost Spot market pricing -4 -3 -2 -1 today 1 2 3 I Cost increases are not directly linked to spot market prices I Contracts typically contain individual escalation terms I
Slide 57: Escalation mechanism in customer contracts
Escalation mechanism in customer contracts I Contracts with airlines have long duration and therefore naturally include escalation clauses I Generally cost increases and possibility to increase prices match well I Contractual framework defines price development to customers EXEMPLARY CLAUSE FOR ESCA
Slide 58: FX trends and implications
FX trends and implications Investor && Analyst Analyst Day Day// November 17, 17, 2022 2022 58
Slide 59: FX environment
FX environment HEDGING CORRIDOR IN % OF USD EXPOSURE I USD exposure derived from recent planning assumptions I Hedging model determines a corridor with a minimum required and 100% a maximum allowed hedge ratio of the USD net exposure per quarter 90% I Quarterly FX committee decides volumes for the s
Slide 60: FX environment
FX environment USD impact on results w/o hedging MODELLING ASSUMPTION - FOR ILLUSTRATION PURPOSES I Hedging policy allows greater planning stability Net exposure grows mid single digit % Unhedged positions to be filled at parity I Currency risks and opportunities are reduced accordingly 2022 2023 20
Slide 61: Guidance 2023 and outlook
Guidance 2023 and outlook Investor && Analyst Analyst Day Day// November 17, 17, 2022 2022 61
Slide 62: 2023 – Business driver
2023 – Business driver Military Commercial OE Commercial spares Commercial MRO I Continuing EJ200 deliveries for I GTF production volume growing I Spare parts continue to grow – I Recovery in narrowbody MRO export customers strongly solid volume and growth continues from narrowbody engines I High su
Slide 63: Guidance 2023
Guidance 2023 ORGANIC REVENUE Military Commercial OE Total Group Sales EBIT adj. Up mid single digit % Up thirty % EUR 6.4 – 6.6 bn Up low ~ 20% Commercial Commercial MRO Spares MRO up high teens % Up high teens GTF share at mid to high to low twenties % thirties % of revenue Investor & Analyst Day
Slide 64: Mid term outlook 2023 – 2025
Mid term outlook 2023 – 2025 I Demand recovery remains strong – Business I FX environment around USD/EUR parity provides AMBITION FOR 2025 parameters from last years mid term outlook remain strong uplift for revenues and EBIT adj. valid and intact I 2023 outlook and growth as outlined in detailed I
Slide 65: Financing environment Cash deployment
Financing environment Cash deployment Investor && Analyst Analyst Day Day// November 17, 17, 2022 2022 65
Slide 66: Debt structure today - impact of higher interest rates
Debt structure today - impact of higher interest rates DEBT MATURITY PROFILE I Maintaining investment-grade rating is mandatory for easy access to debt capital markets 600 I Deviating rating agencies models for evaluation of net debt 500 500 500 I Higher liquidity buffer of EUR 800m (two months of r
Slide 67: MTU's financial policy remains prudent and reliable
MTU’s financial policy remains prudent and reliable Balanced leverage ratio target - 0.5 to 1.5 x net debt/EBITDA MTU’s cash deployment strategy Priorities Organic growth Dividends Share buybacks M&A Opportunistic instrument Targets New program Payout target of 40% to limit deleveraging and Opportun
Slide 68: Questions & Answers
Questions & Answers Peter Kameritsch Chief Financial Officer (CFO) Q&A Investor & Analyst Day / November 17, 2022 68
Slide 69: Executive Summary
Executive Summary Investor & Analyst Day / November 17, 2022 69
Slide 70: MTU is well positioned to benefit from growth and deal with challenges
MTU is well positioned in the market to benefit from further growth and to deal with market challenges Recovery & growth Economic slowdown Recovery expected for 2024, long-term growth and ongoing A strong financial and contractual position prepares well strong orderbooks → Operational excellence in
Slide 71: Questions & Answers
Analyst & Investor Day Questions & Answers Reiner Winkler Michael Schreyögg Lars Wagner Peter Kameritsch Chief Executive Officer (CEO) Chief Program Officer (CPO) Chief Operating Officer (COO) Chief Financial Officer (CFO) Q&A Investor & Analyst Day / November 17, 2022 71
Slide 72: Thank you for your attention.
Thank you for your attention. Investor & Analyst Day / November 17, 2022 72
Slide 73: 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
Slide 74: Proprietary Notice
Proprietary Notice Proprietary Notice This document contains proprietary information of the MTU Aero Engines AG group companies. The document and its contents shall not be copied or disclosed to any third party or used for any purpose other than that for which it is provided, without the prior writt
Slide 75: Contact
Contact Please contact us if you have any further questions MTU Aero Engines AG Thomas Franz Claudia Heinle Matthias Spies Investor Relations Vice President Investor Relations Senior Manager Investor Relations Senior Manager Investor Relations Dachauer Str. 665 Tel.: +49 89 1489 4787 Tel.: +49 89 14