Mtu Aero Engines Ag · XETR:MTX
Mtu Aero Engines — Investor Day (November 2021)
67 slides from Mtu Aero Engines's investor day presentation, Nov 18, 2021
Slide 1: MTU Aero Engines AG – Investor & Analyst Day 2021
Start: 1.30pm CET MTU Aero Engines AG – Investor & Analyst Day 2021
Slide 2: Welcome
Welcome Thomas Franz | Vice President Investor Relations
Slide 3: Agenda
Agenda 1 COVID 19 crisis Reiner Winkler | Chief Executive Officer (CEO) 4 Financials | Outlook 2022 Peter Kameritsch | Chief Financial Officer (CFO) 2 Our product portfolio in the current market Michael Schreyögg | Chief Program Officer (CPO) 5 ESG | Executive summary Reiner Winkler | Chief Executiv
Slide 4: COVID 19 crisis
COVID 19 crisis Reiner Winkler | Chief Executive Officer (CEO)
Slide 5: COVID-19 data show global infections stabilizing with fatalities on a downward trend
COVID-19 data show global infections stabilizing with related fatalities on a downward trend thanks to gradually improving vaccination rates Global monthly COVID infections (million) Vaccination progress Percentage of population with first dose administered as of Sept 19th, 2021 40 China* Europe Asi
Slide 6: Restrictions have limited international travel recovery but vaccination progress helps re-opening
Restrictions have limited international travel recovery but progress in vaccination is increasingly giving governments the confidence to re-open International travel stringency index weighted by population Jan 2020 to Oct 2021 Restrictions are being lifted Asia-Pacific 4 • Vaccinations are a key dri
Slide 7: Global passenger flights have gradually improved whilst cargo keeps on strengthening
Global passenger flights have gradually improved whilst cargo keeps on strengthening Weekly flight cycles compared to same week in 2019 Global passenger and freight 80% Freighters Global • Passenger flights now at 70% of 2019 40% Passenger China • Apart from a number of temporary setbacks in January
Slide 8: Recovery of narrowbody flights continues, widebody supported by freighter business
Recovery of narrowbody flights continues… … while widebody flights are heavily supported by strong freighter business ∆ Worldwide flight cycles compared to same week in 2019 Narrow- and widebody flights 60% Freighter Global • Global and NB passenger 40% developments almost identical 20% WB Freighter
Slide 9: Oil price is picking up; interest rates remain historically low
Oil price is picking up but remains at a historical average Interest rates remain historically low, despite current inflation hike Oil price CPI and interest rates 2017 2018 2019 2020 2021 120 111 112 Consumer price inflation (%;av) 109 99 world 3.2 3.5 3.5 3.3 4.9 100 US 2.1 2.4 1.8 1.2 3.6 80 OECD
Slide 10: No spike in retirements as operators re-activate parked aircraft
No spike in retirements as operators re-activate parked aircraft or keep them in storage Industry park rate • As market recovers parked aircraft 10.000 40% are activated for service resulting 30,0% 8.000 30% in a park rate of 21% as of today 6.000 20,8% after peak of 30% 20% 4.000 7,8% 7,0% 7,0% 6,6
Slide 11: Delivery peak around 2025 expected in line with recovery expectation
Delivery peak around 2025 expected in line with recovery expectation of 2023 – 25 # Aircraft on order Monthly 2019 Current Airframer scenario rate rate 2022 23 24 25 2.500 A220 4 5 6 14 31.12.2019 60 45 65 70 75 A320 2.000 30.09.2020 A330 4 2 2 2–3 1.500 10 5 6 30.09.2021 A350 1.000 737 52/42 19 31
Slide 12: MTU expects narrowbody fleet and deliveries to recover in 2023
MTU expects narrowbody fleet and deliveries to recover in 2023 Widebody fleet and deliveries recover in the 2nd half of the decade Aircraft in-service fleet Aircraft deliveries • Narrowbody passenger fleet Aircraft Aircraft to recover in 2023, widebody 30.000 1.800 passenger fleet in 2025 1.600 • Na
Slide 13: MTU's engine portfolio – a strong basis for future growth
MTU’s engine portfolio today and in the future – a strong basis for future growth Michael Schreyögg | Chief Program Officer (CPO)
Slide 14: MTU's fleet mix is proving resilience with 80% of narrowbody or non-passenger aircraft
MTU’s fleet mix is proving resilience with 80% of narrowbody or non-passenger aircraft Fleet of commercial engines with MTU participation 17% • Strong presence in rebounding single-aisle market, booming 21% cargo segment and some CAGR resilient government applications 15,700 23,800 • Participation i
Slide 15: Narrowbody fleet to grow by 4% p.a. over the next 10 years
Narrowbody fleet to grow by 4% p.a. over the next 10 years MTU fleet outperforms market thanks to GTF engine programs Narrowbody aircraft fleet breakdown 2019 – 29 (# a/c) • Domestic market to exceed CAGR 2019 – 29: pre-Covid levels in 2023 4% (Total) • Retirements in line with historical 6% (MTU OE
Slide 16: MTU's share of the narrowbody fleet is expected to grow from 23% to 28%
MTU’s share of the narrowbody fleet is expected to grow from 23% to 28% in 10 years V2500 retirements on normal level, PW1000G with strong share on new deliveries 5,700 retirements in 2020 – 29 (# a/c) 13,600 deliveries in 2020 – 29 (# a/c) MTU market share of global passenger narrowbody fleet 2019
Slide 17: The fuel efficient V2500 is a young fleet with a strong MRO outlook
The fuel efficient V2500 is a young fleet with a strong MRO outlook A320ceo Family – engine split (# a/c) A320ceo with V2500 – entry into service and SV (# a/c) 2nd SV yet to come V2500 4.000 400 CFM56 1st SV yet to come 3.000 300 2.000 200 1.000 100 38% 58% 33% 0 0 A319 Ø15,7y A320 Ø11,8y A321 Ø9,4
Slide 18: Widebody passenger fleet to grow more modestly by 1.4% p.a.
Widebody passenger fleet to grow more modestly by 1.4% p.a. over the next 10 years MTU widebody fleet outperforms market slightly thanks to GEnx and GE9X Widebody aircraft fleet breakdown 2019 – 29 (# a/c) CAGR 2019 – 29: 1.4% (Total) • Widebody fleet recovery expected by mid of this decade with del
Slide 19: BizJet market held up better than commercial aircraft market during the crisis
BizJet market held up better than commercial aircraft market during the crisis Strong footprint in heavy BizJet market with the PW800 and PW307 • Utilization rates for all BizJet segments 2021 BizJet flight significantly higher than pre-COVID levels hours up 50% and 5% above Pre-Covid levels1 • Pre-
Slide 20: MTU Maintenance successfully navigates through the crisis
MTU Maintenance successfully navigates through the crisis Ongoing strong order book secures future Revenue to reach Pre-Covid level in 2021/2022 growth in MRO MRO revenues development in million US$ 2019 – estimate 2024 Independent MRO campaign wins 2019 – 2021E (in bn US$) MTU Zhuhai 100% MRO repor
Slide 21: MTU well positioned to emerge stronger from the crisis
MTU well positioned to emerge stronger from the crisis – flexibility more important than ever Increasing shop High flexibility Strong market visit demand required position Market environment MRO activities Strategic initiatives • Recovery ramp-up faster than expected • Know-how and capacity maintain
Slide 22: MTU takes advantage of USM and green-time engines to increase competitiveness
MTU takes advantage of USM1 and green-time engines to increase competitiveness Shop visit activity Recovery in flight traffic Green time engines will lead to an increase Limited availability in shop visit demand in number and time Used serviceable material Retirements in line with historical average
Slide 23: Military Business is a stable pillar – also during the Corona crisis
Military Business is a stable pillar – also during the Corona crisis Fighter Transport Helicopter Military revenue split 2021 Eurofighter – EJ200 A400M – TP 400 • Fighter engines are key revenue • Most important revenue contributor • In total, 176 A400M orders contributor • International export camp
Slide 24: Next European Fighter Engine (NEFE) – power for 6th generation military aircraft
Next European Fighter Engine (NEFE) – power for the 6th generation of military aircraft Another major advance in engine technology Achievements Contribution/ Benefits for MTU Responsibilities • Foundation of 50:50 JV EUMET • Compressors • European military backbone • Aftermarket business for the nex
Slide 25: The Technology Roadmap manoeuvres MTU into position for future aircraft platforms
The Technology Roadmap manoeuvres MTU into position to participate in future aircraft platforms – next investment phase expected for mid/end of this decade Participation on platforms in all segments secured MTU will be technologically ready for future new aircraft platforms Today 2030 – 2040 Source:
Slide 26: A strong product portfolio and its long-term perspective (2022 to 2032)
A strong product portfolio and its long-term perspective (2022 to 2032)1 ~23,000 ~14,000 New Engine deliveries GTF engine deliveries (commercial + military) ~14,000 ~80 bn € Shop visits Aftermarket sales (commercial MRO) (commercial spare parts + MRO) 1Source: MTU estimates November 18, 2021 26 © MT
Slide 27: Technology Roadmap | Cost Leadership
Technology Roadmap | Cost Leadership Lars Wagner | Chief Operating Officer (COO)
Slide 28: Future engine technologies, enhanced production and global footprint
Future engine technologies, enhanced production and global footprint
Slide 29: MTU's technology roadmap towards emission-free flying
MTU’s technology roadmap towards emission-free flying Application/Range Short- Mid- Long- Evolutionary GTF development range range range Short- Mid- Long- Revolutionary engine concepts range range range turbine Gas Short- Mid- Long- Drop-in – no infrastructure change: SAF range range range Short- Mi
Slide 30: New concepts
New concepts Evolutionary Revolutionary Gen2 GTF WET Engine Flying fuel cell CO2 NOx Contrails CO2 NOx Contrails CO2 NOx Contrails -10% -20% -80% -100% -100% -100% SAF -100% SAF -100% -80% November 18, 2021 30 © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Eng
Slide 31: R&D technology initiatives and achievements
R&D technology initiatives and achievements Worldclass components Leight-weight, high-temperature materials • Low pressure turbines • Fibre-reinforced plastics • Low/high pressure compressors • Powder metal Advanced systems demonstrators Sustainable Aviation Fuels • Flying Fuel Cell scaled ground de
Slide 32: Sustainable production
Sustainable production
Slide 33: EcoRoadmap: climate neutral production @MTU
EcoRoadmap: climate neutral production @MTU Climate neutral production starting Technology in Munich and extending to all sites Studies on Sustainable Aviation Fuels in testing facitilites Test cell Together for the climate Three approaches for CO2 reduction: Culture avoidance, transformation, compe
Slide 34: Cost-efficient and cutting-edge production
Cost-efficient and cutting-edge production
Slide 35: Preparation of re-ramp-up
Preparation of re-ramp-up MTU has used the time during COVID crisis to prepare for the re-ramp-up New matrix Industry 4.0 Supply chain organization & digitization & digitization • Lean structure & value stream • Cost reduction through automation • Make-or-buy strategy alignment • Highly flexible lot
Slide 36: Cost Leadership: BKM – project for unit cost reduction
Cost Leadership: “BKM” – project for unit cost reduction Unit cost reduction for high volume engine programs Synergies in production processes across commodities Integration of all departments and stakeholders Innovative ideas to challenge today’s cost basis and re-sharpen cost-awareness Holistic ap
Slide 37: FPH: Flow path hardware
FPH: Flow path hardware Next step in Industry 4.0 FPH Fully automated flow path hardware manufacturing with autonomous robots Main benefits • Eco-system of freely moving robots for autonomous storage, parts and tools management • Offset corrections for individual geometry and adjustment of NC-progra
Slide 38: FFS: Flexible manufacturing system
FFS: Flexible manufacturing system Next step in Industry 4.0 FFS Fully automated HPT blade, vane and structure parts manufacturing Main benefits • High degree of automation: Chained production system for grinding, milling and drilling Automated parts and tool set-up Adaptive production based o
Slide 39: Extended global footprint
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Slide 40: OEM Global footprint: Global growth perspectives
OEM Global footprint: Global growth perspectives Increased capacities for engineering, manufacturing and the supply chain Engineering Future global footprint Manufacturing Procurement November 18, 2021 40 © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines
Slide 41: Extended engineering footprint for optimal cost structure and customer proximity
Extended engineering footprint for optimal cost structure and customer proximity Target set-up for future engineering footprint MTU Aero Engines MTU Aero Engines MTU Aero Engines + Identification North America Munich Polska of low cost opportunities Capacity growth Capacity growth Capacity growth 10
Slide 42: OEM Global footprint – target vision for future manufacturing sites
OEM Global footprint – target vision for future manufacturing sites Target set-up OEM Munich: Target set-up OEM Polska: Target set-up OEM Best Cost: Renewed infrastructure and Enhanced portfolio Capacity growth competences GEN2/NEFE/FFC • Development/compliance hardware • Expansion to static parts w
Slide 43: Global footprint procurement: 1 billion € volume in 2020
Global footprint procurement: 1 billion € volume in 2020 460 million € volume in production material in 2020 Future procurement strategy 2030 Technology support Germany Asia • Early participation in development phase 198 suppliers 24 suppliers • Future programs: NEFE and Gen1+ 85 million € 56 millio
Slide 44: Financials
Financials Peter Kameritsch | Chief Financial Officer (CFO) | Chief Information Officer (CIO)
Slide 45: GTF MRO network
GTF MRO network
Slide 46: GTF MRO – worldwide network provides capacity for the fast growing fleet
GTF MRO – worldwide network provides capacity for the fast growing fleet All partners in the GTF MRO service Once the shop network operate under one standard visit is finished • Contractual fixed hourly rates or fixed prices for work packages • All costs are invoiced to IAE, spare parts at list pric
Slide 47: GTF MRO – one standard for all GTF MRO service providers
GTF MRO – worldwide network provides capacity for the fast growing fleet One standard for all GTF MRO service providers Spare parts at list price MRO • Hanover • Zhuhai Invoice: performed work, • EME spare parts at list price and repairs PW1100G-JM Aftermarket agreement airline customers Produces an
Slide 48: GTF MRO at MTU Maintenance
GTF MRO at MTU Maintenance Secured shop load and absolute EBIT contribution Implications for MTU Maintenance Segment EBIT margin Efficient cost control Workload secured, no Strong revenue Positive EBIT suffers from large provides opportunities sales activity needed contribution/growth contributor vo
Slide 49: Guidance 2022
Liabilities 188,630 Cure cites pie Nera bis ‘am Equity Pacincaid Retarac ean. Income statement Revenues 12,978,516 tse ‘amrae Expenses 6,372,535 | Ress ae Dewpmet 1 Opera aes ror) een | Net income 6,505,984 Guidance 2022 Equity statement Current year 1.774.578 — = Previous year 186,620 Compeamarcan
Slide 50: The year 2022: Acceleration in recovery
The year 2022: Acceleration in recovery Business driver OE MRO Military Commercial OE Commercial Spares Commercial MRO • EJ200 deliveries growing • Production volume for • Spare parts continue to • Recovery in narrowbody (export customers) narrowbody engines grow – main volume and MRO continues grow
Slide 51: The year 2022: Acceleration in recovery
The year 2022: Acceleration in recovery Organic revenue Military Commercial OE Up high single digit % Up mid to high teens % Total Group Sales: OE 5.2 – 5.4 bn € MRO EBIT adj. Net Income adj. Up mid Growth in line Commercial Spares Commercial MRO twenties % with EBIT adj. Up mid teens % MRO up mid t
Slide 52: Mid-term outlook
Mid-term outlook
Slide 53: Increase in production rates drives strong growth
Increase in production rates drives strong growth MTU commercial OE revenue breakdown • Growth in narrowbody and regional jet output dominates • GEnx delivery rates improving CAGR from current lows Com. OE Com. OE revenues revenues • GE9X will start to contribute 2021E 2024E to widebody revenue Mid
Slide 54: Spare parts revenues growth – overweight in narrowbody engines
Spare parts revenues growth – overweight in narrowbody engines MTU commercial spares revenue breakdown • Spare parts for narrowbody and regional aircraft with highest growth rates CAGR • Solid widebody contribution supported Com. spares Com. spares by strong freighter exposure revenues revenues 2021
Slide 55: Military business provided stability in the crisis – and continues to grow
Military business provided stability in the crisis – and continues to grow MTU military OEM revenue breakdown • Revenue generation from new engines declining • Services and aftermarket provide CAGR solid growth potential Com. military Com. military revenues revenues • Underlying assumptions 2021E 20
Slide 56: Commercial MRO business will continue to grow strongly
Commercial MRO business will continue to grow strongly MTU commercial MRO revenue breakdown • Strong independent MRO wins lead to a strong growth expectation • Share of independent vs. OEM-MRO CAGR cooperation will remain stable with Com. MRO Com. MRO GTF maintenance as main driver revenues revenues
Slide 57: Mid-term outlook 2021 – 2024
Mid-term outlook 2021 – 2024 Improved free cashflow conversion confirmed – back on growth path Revenue EBIT adj CCR* Steady Exceeding High double growth 2019 level digit % *Cash Conversion Rate = Free Cashflow/Net Income adj. November 18, 2021 57 © MTU Aero Engines AG. The information contained here
Slide 58: MTU's cash deployment strategy – return to previous targets
MTU’s target is a balanced leverage ratio in the range of 0.5 to 1.5 x net Debt/EBITDA MTU’s cash deployment strategy – return to previous targets Priorities Organic growth Dividends Share buybacks 2021 – 2024 Opportunistic Payout target New program instrument to limit of 40% of net opportunities de
Slide 59: Prepared for above market growth as aviation returns
Prepared for above market growth as aviation returns
Slide 60: ESG & Executive summary
ESG & Executive summary Reiner Winkler | Chief Executive Officer (CEO)
Slide 61: MTU is committed to the UN Sustainable Development Goals
MTU is committed to the UN Sustainable Development Goals and contributes to 8 goals 5 9 13 17 MTU advocates diversity Advancing sustainable Climate action through MTU is convinced and equality of opportunity aviation – MTU makes sustainable engine that the challenges (important focus on major contri
Slide 62: ESG @ MTU – CR fields of action and primary goals up to 2025
ESG @ MTU – CR fields of action and primary goals up to 2025 CR board implemented pushing sustainability Corporate governance • Reducing the climate impact of products • MTU supports plans to build a production plant for green kerosene in Bavaria Product Manufacturing ecoRoadmap & maintenance In our
Slide 63: ESG @ MTU – our claim and corporate responsibility strategy
ESG @ MTU – our claim and corporate responsibility (CR) strategy Today 2025 2030 2050 MTU´s Sustainability Program 2025+ 2030 Climate strategy “Production” 2050 Climate strategy “Product” • Fields of action identified • ecoRoadmap – • CLAIRE (Clean Air Engine agenda) – • Respective goals for each fi
Slide 64: Executive Summary
Executive Summary Market recovery driven by improved vaccination rates is taking hold Profitable growth path and MTUs unique product portfolio benefitting future prospects secured. from rebounding single-aisle market and booming cargo segment MTU will outperform market growth in commercial narrowbod
Slide 65: Questions & Answers
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) Investor & Analyst Day 2021
Slide 66: 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 67: 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 written agreement of MTU