Mtu Aero Engines Ag · XETR:MTX
Mtu Aero Engines — Investor Day (November 2013)
51 slides from Mtu Aero Engines's investor day presentation, Nov 26, 2013
Slide 1: Investor & Analyst Day 2013
Investor & Analyst Day 2013 MTU Aero Engines London, November 26, 2013 26 November 2013 Investor & Analyst Day 1
Slide 2: Agenda – MTU Investor and Analyst Day 2013
Agenda – MTU Investor and Analyst Day 2013 Time Agenda Speaker Peter Kameritsch 11:00 – 11:10 Welcome VP Investor Relations 11:10 – 11:30 Executing our growth strategy Reiner Winkler, CFO Michael Schreyögg 11:30 – 12:20 The OEM Portfolio Member of BoM, Programs Managing Growth and Transition: 12:20
Slide 3: Executing our growth strategy
Executing our growth strategy Reiner Winkler, CFO London, November 26, 2013 26 November 2013 Investor & Analyst Day 3
Slide 4: Very positive outlook for the aerospace market
Very positive outlook for the aerospace market • Record airliner orderbook of almost 10,000 aircraft • Record deliveries from Airbus and Boeing of over 1,200 aircraft expected for 2013 • Current airliner engine fleet of almost 38,000 (+3.3 % y-o-y) • Positive development of growth indicators forecas
Slide 5: Commercial OEM Business
Commercial OEM Business • Over 4,700 GTF engines on firm order or optioned • Almost 100% of NextGen Regional Jet deliveries with GTF • Current market share GTF for A320neo of 54% regarding firm orders 1) • Successful First Flight CSeries completed • Preparation of GTF production ramp-up on track • F
Slide 6: Military Business
Military Business • 1st A400M series aircraft has been delivered to France • Running Eurofighter export campaigns to be supported by MTU • Sales of 450 – 500 M€ p.a. expected for next years Military OEM business remains stable 26 November 2013 Investor & Analyst Day 6
Slide 7: Commercial MRO Business
Commercial MRO Business • GE90 ramp-up on track. First Full Shop Visits successfully executed • Market leader on V2500 • MTU Zhuhai through capacity expansion well prepared for future growing Asian MRO-market • Expansion of engine lease business through partnership with Sumitomo MRO engine portfol
Slide 8: Upcoming Challenges for MTU
Upcoming Challenges for MTU • Transition from V2500 to GTF and strong market share gain in Regional Jet market results in - strong revenue growth - margin headwinds - capex needs - additional inventory requirements • Further pressure on cash flow due to declining military prepayments • Cash flow sit
Slide 9: Thank you for your attention!
Thank you for your attention! 26 November 2013 Investor & Analyst Day 9
Slide 10: The OEM Portfolio
The OEM Portfolio Michael Schreyögg Member of the Board of Management, Programs London, November 26, 2013 26 November 2013 Investor & Analyst Day 10
Slide 11: Military Business
Military Business Major Achievements Current Export Campaigns Typhoon • Oman Contract 12 EF Typhoon a/c • United Arabian Emirates • A400M Entry Into Service • Saudi Arabian Royal Air Force • Long term support contract RSAF • Qatar • South Korea • Malaysia Revenue Outlook Military Programs A400M Deli
Slide 12: Commercial OEM Business
Commercial OEM Business Major Achievements On MTU‘s Growth Path • PW1100G-JM for A320neo on track for certification July 2014 • Embraer E-Jet E2 won • Bombardier CSeries – First Flight • GEnx – steep ramp up well managed • V2500 – upshare completed • Increased aftermarket coverage via FHA 26 Novembe
Slide 13: Commercial Business – Narrowbody Market
Commercial Business – Narrowbody Market Major Achievements • GTF success will increase MTU’s share in • Increased exposure to strongly growing V2500 the future narrowbody market aftermarket Installed Base 2013 Firm Orders Of A320neo With PW1100G-JM: 54% A320ceo A320neo powered powered by V2500 by PW
Slide 14: Commercial Business – Narrowbody Market
Commercial Business – Narrowbody Market Transition V2500 To PW1100G-JM GTF (A320neo) Characteristics Engines • Extremely fast transition • Investment in new technology V2500 spares • Highly competitive environment • Sole supplier for Airbus in the early program phase V2500 PW1100G-JM 2012 2013 2014
Slide 15: Commercial Business – Widebody Market
Commercial Business – Widebody Market Revenues on widebody programs Characteristics • Production increase GEnx well managed • GP7000 order book covers deliveries until 2017 GEnx • Unexpected positive development of GP7000 Airbus A330 sales (+ CF6-80E) • Completion of F117 (PW2000) new engine CF6-80C
Slide 16: Commercial Business – Regional Jet Market
Commercial Business – Regional Jet Market (*) Market change towards PW1000G engines Deliveries: CF34: 91% PW1000G: 90% Other Jets Other Jets (*) Today: CF34 dominated Future: PW1000G dominated < 140 Seats CRJ700/ 900 EMB170/ 190/ 195 CSeries MRJ70/ 90 EMB175/ 190/ 195-E2 EIS: 2001/2004 2004/2006 tod
Slide 17: Commercial Business – Regional Jet Market
Commercial Business – Regional Jet Market Deliveries of regional a/c rise Characteristics • 100% win in new regional aircrafts Covered by a single engine familiy: PW1000G Embraer E2 • Development CAGR of Regional Jet market growth 7% yoy MRJ CSeries 2014 2015 2016 2017 2018 2019 26 November 2013 Inv
Slide 18: MTU Spare Parts Portfolio
MTU Spare Parts Portfolio Today Future (2020) V2500 incl. Upshare V2500 incl. Upshare Characteristics: V2500 PW2000 • Continuous growth in V2500 aftermarket • Commercial fleet continuous to decline until 2020 • Long term service agreements and T&M spare sales • PW2000 military: stable on lower level
Slide 19: Outlook OEM Business
Outlook OEM Business • Continuous increase in OE deliveries in the mid teens • Market share gains in the narrowbody segment • Full coverage of Regional Jet market by GTF achieved • High investment in installed base continues • Aftermarket portfolio ensures long term spares growth 26 November 2013 In
Slide 20: Thank you for your attention!
Thank you for your attention! 26 November 2013 Investor & Analyst Day 20
Slide 21: Managing Growth and Transition: Engineering & Supply Chain
Managing Growth and Transition: Engineering & Supply Chain Dr. Rainer Martens, COO London, November 26, 2013 26 November 2013 Investor & Analyst Day 21
Slide 22: Technical Milestones GTF Programs
Technical Milestones GTF Programs 26 November 2013 Investor & Analyst Day 22
Slide 23: Ramp Up Series Production
Ramp Up Series Production 2009 2013 2018 2020 Turbines 800 1300 1900 2200 Compressors 200 300 1300 1500 TCF 30 300 350 300 Engine Assembly 30 60 300 300 Total 1060 1960 3850 4300 + 100% + 100% The challenge: proactively securing the ramp up 26 November 2013 Investor & Analyst Day 23
Slide 24: Measures to Ensure Ramp Up Capability
Measures to Ensure Ramp Up Capability Internal Supply Chain External Supply Chain • Provide infrastructure and manufacturing • Select capable and competent supplier capacity • Provide infrastructure and manufacturing • Develop and certify the required manufacturing capacity processes • Develop and c
Slide 25: Key Projects
Key Projects Optimize Rotor- and New Blisk Shop Stator Production Lines Extension of Engine Assemblies MTU-Polska Logistics-Building Projects are well on their way and will support the production ramp up! 26 November 2013 Investor & Analyst Day 25
Slide 26: Extension of MTU-Polska
Extension of MTU-Polska Key Facts Plant view including extension New surface area created: . • 7600 m2 Production • 1400 m2 Office Product portfolio: • Assembly • Pre-turning • LPT Blades & Vanes • Engineering Increase in Head Count: • 100 White collar • 200 Blue collar 26 November 2013 Investor & A
Slide 27: New Materials: TIAL – a Significant Step in Technology
New Materials: TIAL – a Significant Step in Technology Key Facts Production Processes TiAl alloy Nickel alloy Casting of billet Advantage: • 50% less dense than superalloys and steels • High specific strength Isothermal forging • Extremely beneficial for the use in high speed of raw material low pre
Slide 28: Activities to Increase Efficiency and Optimize Costs
Activities to Increase Efficiency and Optimize Costs • Extension of MTU-Polska • Optimization of production lines like disc- and casing-line • Increase standard machine utilization time per year by automation • Increase number of shifts and working days • Introduction of new technologies for inhouse
Slide 29: Summary
Summary • Engine development programs are on track • Ramp up is well prepared • Key projects are well on their way • Suppliers are and will be prepared according to plans • Capex-budgets slightly higher in the next two years • Inventory increase is limited to 10% - 20% till 2017 because of productio
Slide 30: Thank you for your attention!
Thank you for your attention! 26 November 2013 Investor & Analyst Day 30
Slide 31: Opportunities in a Challenging Market
Opportunities in a Challenging Market Dr. Stefan Weingartner President Commercial Maintenance London, November 26, 2013 26 November 2013 Investor & Analyst Day 31
Slide 32: Current Market Trends – per November 2013
Current Market Trends – per November 2013 GDP +2.0% +2.7% 2013E 2014E • All major advanced economies to grow in 2014 • Slowdown in emerging markets Freight +0.9% +3.7% traffic 2013E 2014E • Cargo traffic recovers since Q2 (+0.5% in Sept) Passenger traffic +5.0% +5.8% 2013E 2014E • Improv
Slide 33: Passenger Traffic and Aircraft Utilization
Passenger Traffic and Aircraft Utilization Global traffic & cycles (quarterly) Highlights Global Passenger Traffic (y-o-y) Airliner Cycles (y-o-y) • Global passenger traffic up 5.6% in Q3 10% 10% • Cycle rebound follows traffic rebound 8% +5.6% 8% however at a lower growth rate in Q3 • Growth in cyc
Slide 34: Commercial Engine MRO Market 2013-23
Commercial Engine MRO Market 2013-23 MRO revenues (b$)1/2 40 CAGR 2013-23 World (total): 7.4% MTU coverage3 9.6% 35 Other 3.9% 30 68% 25 20 15 1056% 5 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1 WB, NB & RJ (TP and BJ excluded); 2 3.6% escalation included 3 including current and plann
Slide 35: Market Indicators per Engine Type
Market Indicators per Engine Type Active Park Flight Engine fleet rate Hours1 Y-O-Y as of 30 Sept. 2013 Ø Airliner engines 38,420 +3.9% 10.4% 5.1% Growth in fleet and hours is strengthening V2500-A5 +12% 4,438 2% +11% Steady double-digit growth GE90G +19% 1,134 0% 13% Success story goes on, 100
Slide 36: MTU Maintenance Workload Development
MTU Maintenance Workload Development 2013 2014 Engine trend trend Ø All products Lower volume in 2014 for CF34 and mature engines compensated by CFM56, V2500 and GE90 growth V2500 • Continuous -A5 growth from a high volume base • Ongoing -A1/-D5 workload from base customers GE90 •
Slide 37: Our Commercial MRO Growth is Based on the Successful Market Penetration via Various Channels
Our Commercial MRO Growth is Based on the Successful Market Penetration via Various Channels Market access channels & Sales distribution Independent Airline Cooperation OEM Cooperation Additional Services JV RSP Network CF6, CFM56 V2500 CF34 On-site Services CFM56 GE90, PW2000 GP7 LPT PWC Parts Repa
Slide 38: GE90G Fleet and Shop Visit Development
GE90G Fleet and Shop Visit Development Fleet and shop visit forecast 2013-2023 # shop visits # active engines Scheduled shop visits 700 2000 Shop visits Unscheduled Other removals 1800 600 Active engines 1600 500 % UER rate 1400 1200 400 48% 1000 300 800 54% 55% 200 600 400 100 200 0 0 2011*2012* 20
Slide 39: MTU Maintenance GE90G Services
MTU Maintenance GE90G Services Capabilities and program highlights • Full level III capabilities • piece part cleaning and inspection • balancing and grinding • over 180 repairs developed/introduced • full in-house testing • Large portfolio of workscopes – from quick turn program visits to full perf
Slide 40: Summary
Summary • Challenging market dynamics offer opportunities in terms of market access, competitiveness and profitability • Organic growth thanks to ramp-up of existing programs and new program introductions • Secure access to new/future engine types in cooperation with OEMs • Offer independent solutio
Slide 41: Thank you for your attention!
Thank you for your attention! 26 November 2013 Investor & Analyst Day 41
Slide 42: MTU Efficiency Projects Head- and Tailwinds 2014
MTU Efficiency Projects Head- and Tailwinds 2014 Reiner Winkler, CFO London, November 26, 2013 26 November 2013 Investor & Analyst Day 42
Slide 43: Challenging Business Environment 2014 - 2017 Causing Headwinds on EBIT and FCF
Challenging Business Environment 2014 - 2017 Causing Headwinds on EBIT and FCF • Stronger growth in new engine business compared to spare parts • Fast ramp up of 5 different GTF engine platforms • Replacement of a learned-out product (V2500) with a new technology product (PW1100G) • Investment in (l
Slide 44: „Cash for Future“ Project Launched to Limit Impact on EBIT and FCF
„Cash for Future“ Project Launched to Limit Impact on EBIT and FCF No Headcount reduction in manufacturing due to strong upcoming ramp-up Measures to reduce cost: • Headcount in adminstration cut by ~100 until 2016 (no replacement) • Cut of general expenses (travel, external consultants, marketing)
Slide 45: „Cash for Future“ Project: Inventory Growth Reduced by € 100 m
„Cash for Future“ Project Launched to Limit Impact on EBIT and FCF Inventory Growth Reduced by € 100 m • OEM revenues will increase by ~ 40% until 2017 • At a constant capital turnover rate inventories would grow in line with volumes • Capital turnover rate improvement from ~ 3,5 to ~ 4,5 targeted •
Slide 46: „Cash for Future“ Project: Examples of Working Capital Optimization
„Cash for Future“ Project: Examples of Working Capital Optimization Improved Reduced Reduced production assembly consignment flow lead time warehouse Production Assessment Order Production Assembly Delivery of demand dispatching planning Purchasing Improved Reduced Optimized demand provisioning lot
Slide 47: 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 • Key focus on new engine programs • MTU sticks to dividend policy • M&A off the table • Share buy-back more long term focus 26 November 2013 Investor & Analyst Day 47
Slide 48: EBIT adj. Head- and Tailwinds 2014
EBIT adj. Head- and Tailwinds 2014 • New engines sales up in the mid teens • Spare parts up mid single digit • Commercial MRO up high single digit • Military revenues at lower end of € 450m - € 500m range • R&D stable • FX: Slight headwind 26 November 2013 Investor & Analyst Day 48
Slide 49: Key Take Aways
Key Take Aways • MTU continues to invest into the future - Today strong deliveries of V2500, GEnX and GP7000 - From 2014 onwards steep ramp up of GTF family - GTF will significantly increase MTUs future market share - V2500 drives aftermarket growth in this decade, but also significant contribution
Slide 50: Thank you for your attention!
Thank you for your attention! 26 November 2013 Investor & Analyst Day 50
Slide 51: 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