1. business and industrial

Company Presentation
MTU Aero Engines
Contents
1.
Company Overview
2.
Commercial OEM Business
3.
Military OEM Business
4.
Commercial MRO Business
5.
Financials & Outlook
MTU Investor Relations
2
MTU is Built on Three Pillars
Sales*
Commercial Business
Military Business
Commercial MRO
• Risk and revenue sharing partner
with all major OEMs
• Focus on Low-Pressure Turbines
and High-Pressure Compressors
• Approx. 30% of active aircraft with
MTU participation
• Capability to develop and manufacture entire engines
• R&D is typically customer financed
• MTU has high shares in key
European military programs
• World's largest independent
engine MRO provider (Maintenance,
Repair and Overhaul)
• Exposure to highest growth engines
(V2500, CFM56, CF34, GE90)
• Strong presence in Asia
€ 1,891m (53%)
€ 500 m (14%)
€ 1,214 m (34%)
Business
OEM
MRO
EBIT margin*
11.0%
8.9%
MTU Group*
Sales: € 3,574 m / EBIT margin: 10.4%
* FY2013 – figures
MTU Investor Relations
3
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 regional jet market by 90%
• Narrowbodies: V2500 strong market base, PW1100G EIS*) 2015
• Widebodies: GE9x participation secured, Genx, GP7000 60% market share
• Broad MRO engine portfolio secures over proportional growth
High barriers to entry
• Leading technology (in design & manufacturing)
• Certification requirements and regulatory approvals
• Substantial up-front investment required
• Long term contracts
*) EIS = entry into service
MTU Investor Relations
4
Long Term Outlook 2014 - 2024
Investment Phase
2014-2017
Consolidation Phase
2018-2024
Military:
Military:
Com. OE
Com. OE
Com. Spares
Com. Spares
Com. MRO:
Com. MRO:
EBIT adjusted
Moderate progression
Margin expansion
Net Income
Growth stronger than EBIT adj.
Growth in line with EBIT adj.
adjusted
(Falling tax rate)
CCR*
Low double digit %
Revenues
High double digit %
*) Cash Conversion Rate (CCR) defined as Free Cash Flow / Net income adjusted
MTU Investor Relations
5
Contents
1.
Company Overview
2.
Commercial OEM Business
3.
Military OEM Business
4.
Commercial MRO Business
5.
Financials & Outlook
MTU Investor Relations
6
Overview of Aero Engine Industry Players
Key Market Participants in Large Engine Business
MTU Investor Relations
7
Important Partner for all Major OEMs
Main OEM Partners
Key OEM Partnerships
in %
Others
MTU
OEM Partners
Program
share
GP7000
• General Electric
• Pratt & Whitney
22.5%
PW1000G
• Pratt & Whitney
15 -18%
V2500
• IAE
16%
GEnx
• General Electric
6.6%
G9x
• General Electric
4%
Program
3%
GE
IAE
31%
41%
P&W
25%
FY 2013 Commercial
Business Revenues: € ~1,891 m
MTU Investor Relations
8
Balanced Product Portfolio
MTU‘s Engine Portfolio is Well Balanced Between Young and Mature Programs
Life Cycle Cash Flow Profile of Commercial MTU Engines
(MD-80)
(A300, A310,
Entry into Service
B747, 767)
CF6
-80C
(B757, C-17)
JT8D200
PW
2000
CF6-50
/80A
(747, 767, A300,
A310, DC-10)
V2500
cumulative Cash Flow
(A320, MD-90)
CF680E
PW500
(777X)
GE9X
PW
4000G
(Emb E2 Jet)
PW
1700G
1900G
(A330)
(Cessna XLS, Cessna Bravo)
(B777)
PW300
PW
6000
PW
1400G
(Irkut
MS-21)
PW800
PW
1200G
PW
1100G
PW
1500G
(G500,
(MRJ)
(A320neo)
G600)
(CSeries)
GEnx
GP
7000
(A318)
(A380)
(G200, 328JET,
Sovereign,
Falcon 7X,
Latitude)
(787 &
747-8)
Phase-out
Series production
R&D
Aftermarket ( Spare parts + MRO)
MTU Investor Relations
9
Some 60,000 Com. Aircraft will be Required over the next 20 Years
Resulting in ~ US$ 1,000 bn of engine revenues;
Thereof 85% will be generated by NB / WB
Business Jets
Regional Jets
& Turboprops
Narrowbody
Widebody
Source: MTU June 2014
MTU Investor Relations
10
New Business Jet Product Family – PW800 (Gulfsteam G500/G600)
2015
2013 2020
2014
2025
• Clean-sheet design
Oct 14: presentation of new G500 and
G600 business jets by Gulfstream
• Powered by Pure Power PW800 (GTF core)
• MTU holds a program share of 15%
• MTU will be responsible for the LPT, the first
Dec 14: expected engine
certification PW800
four stages of the HPC and will participate in
the aftermarket business
2018: expected EIS G500
• MTU turnover in the segment will increase
by factor 4 until 2025
2019: expected EIS G600
MTU Investor Relations
11
GTF Engines will Dominate Future Regional Jet Market
(*)
Market change towards PW1000G engines
Deliveries:
PW1000G: 90%
CF34: 91%
Other Jets
Other Jets
Today: CF34 dominated
CRJ700/ 900
EIS:
2001/2004
Future: PW1000G dominated
EMB170/ 190/ 195
2004/2006
CSeries
today
2015
MTU Investor Relations
MRJ70/ 90
2017
(*)
< 140 Seats
EMB175/ 190/ 195-E2
2017/2019
12
MTU Well Positioned in the Fast Growing Narrowbody Market
Major Achievements
• Increased exposure to strongly growing
V2500 aftermarket
Installed Base 2013
• GTF success will increase MTU’s share in the
future narrowbody market
Firm Orders Of A320neo With PW1100G-JM: 54%
A320ceo
powered by V2500
A320neo powered
by PW1100G-JM
B737MAX
A320 and B737 with CFM56
A320neo with LEAP
* Unannounced
MTU Investor Relations
engine decisions are shared equally
13
Participation in well Positioned Widebody Programs
GE9x (B777x)
• Program share of 4% secured
• 4 bn € revenues expected over whole engine life time
• EIS targeted for 2020
GEnx (B787 / B747-8)
• 50% growth in Genx module deliveries in 2014
• > 1,300 GEnx engines on order
• Current market share of GEnx around 60% (B787)
GP7000 (A380)
• 2014 module deliveries remain stable on high level of 2013
• Current market share of GP7000 is roughly 60%
MTU Investor Relations
14
MTU’s Installed Thurst Secures Strong Aftermarket Growth
MTU Investor Relations
15
MTU Spare Parts Portfolio
Future spare parts portfolio will be more diversified
Today (2014)
Future (2024)
Characteristics:
V2500
• Continuous growth in V2500 aftermarket
• Long term service agreements and T&M spare sales
• Boosted by increased program share
• Peak installed base: 2017 => Peak aftermarket in 2024
New programs (GP7000, GEnx, PW1000G)
• Significant share by 2024
MTU Investor Relations
PW2000
• Commercial fleet continuous to decline until 2020
• PW2000 military: stable on lower level
CF6-80C/E programs
• Continuous to provide stable revenues, slight reduction
towards end of decade
16
Key Projects for Ramp up on Track
MTU Investor Relations
17
Contents
1.
Company Overview
2.
Commercial OEM Business
3.
Military OEM Business
4.
Commercial MRO Business
5.
Financials & Outlook
MTU Investor Relations
18
Military Business
Stable revenues expected for the next years
• EJ200 (Eurofighter):
- EJ200 Tranche 3a secures production until 2017
- Various EJ200 export campaings running
• TP400 (A400M):
- Excellent performance in first missions
- First aircrafts delivered to Air Forces in France, UK, Turkey
- First Flight of German A400M took place Oct. 14, on plan for
delivery scheduled end of November
• GE38 (CH53-K):
- Achievement of first engine runs on the Ground Test Vehicle
- Preparations for First Flight 2015 in place
MTU Investor Relations
19
Contents
1.
Company Overview
2.
Commercial OEM Business
3.
Military OEM Business
4.
Commercial MRO Business
5.
Financials & Outlook
MTU Investor Relations
20
Thanks to MTU‘s Hybrid Strategy and Market Coverage, its Served
Market will Grow Over-Proportionally at 11.3% over the next 10 Years
Commercial MRO market [b$]*
CAGR
2014-35
14-24
Total:
6.7%
8.5%
MTU-served
8.0%
11.3%
Remarks
• The MTU-served market will grow overproportionally at 11.3% from 12 to 34b$ versus a 8.5% growth of the total market.
45
• MTU Maintenance has the broadest engine
portfolio of all MRO providers. It serves
nearly all engine types except the RR
engines.
20
• Market coverage grows from ~56% today to
~68% in 10 years time
• Growth programs: GE90 Growth, V2500-A5,
CFM56-5B/-7, GP7000, GEnx and
PW1000G
2014
Independent old
OEMRO1
1
2024
Independent new
Rest2
Including PW1100/1700/1900, GEnX, GE-9X; 2 Mainly RR
• The OEMRO model gains in importance in
the coming decades.
Source: MTU, October 2014
MTU Investor Relations
*
Escalation included
21
Market Channels as Independent MRO Provider and as Partner
of the OEM Cooperation
Independent
Old
Independent
New
CF6
V2500-A1/-D5
CFM56-3
CF34
PW2000
CFM56-5B/-7
V2500-A5
GE90G
CF34-10/-8
OEM cooperation
IGT,
Other services
V2500
GP7 LPT
GEnx TCF
PW1000G
PWC
LM2500, LM6000
On-site services
Parts repair
Spare engine support
LRU Mgmt
2014 Sales:
~ 25 %
~ 35 %
~ 20 %
~ 20 %
2024 Sales:
~ 10 %
~ 40 %
~ 30 %
~ 20 %
MTU Investor Relations
22
MTU MRO well Positioned in Changing Business Environment
• Contract volume ~ US$ 5.2 bn
• Ramp up of G90 shop visits at MTU Hanover
• MTU Zhuhai’s capacity increase by 50% to 300 shop visits p.a.
successfully completed and ramp-up ongoing
• MTU Maintenance lease Services B.V. (JV with Sumitomo
Corporation) in operation
• MTUPlus Mature Engine Solutions launched
• MTU’s hybrid strategy (independent + OEM-MRO) and broad
engine portfolio will secure over-proportional growth
• World‘s 3rd largest engine MRO service provider with a market
share of 8%
MTU Investor Relations
23
Contents
1.
Company Overview
2.
Commercial OEM Business
3.
Military OEM Business
4.
Commercial MRO Business
5.
Financials & Outlook
MTU Investor Relations
24
Guidance 2014
in m€
FY 2013
Guidance 2014
Revenues
3,574.1
~3,750
EBIT adj.
373.1
10.4%
~ 380
Net income adj.
235.7
~ 250
• Series revenues expected to increase in the low teens
• Spare parts revenues expected to grow high single digit
• Military business revenues to remain flat on the level of 2013
• Commercial MRO revenues expected to be up low single digit
• Free Cashflow is expected at mid double digit (w/o acquisition payments for new programs)
MTU Investor Relations
25
Head- and Tailwinds 2015
Revenue Growth
Military:
Stable
New engine Sales (Com. OE):
High single digit
Spare parts Sales (Com. Spares):
Mid single digit
Commercial MRO:
High single digit
Slight tailwind from US$ fx-rate
MTU Investor Relations
26
Priority List of Cash Flow Use
1) Invest in
Organic Growth
2) Dividend increase
3) Share Buy-back
4) M&A transactions
•
•
•
•
Key focus on new engine programs
MTU sticks to dividend policy
Share buy-back more mid to long term focus
M&A off the table
MTU Investor Relations
27
Appendix
MTU Investor Relations
28
Appendix
9M / 2014: Group Revenues up 6%
MTU Group Revenues
Segment Revenues
in m €
in m €
+1%*
2.660
2.812
912
368
1.403
9M / 2013
9M / 2014
9M / 2013
Commercial Business
921
352
1.564
9M / 2014
Military Business
MRO
* on US$ basis +4%
* US$ basis +8%
** on US$ basis +15%
MTU Investor Relations
29
Appendix
9M / 2014: Group EBIT adj. Margin at 9.6%
MTU Group EBIT adj.
Segment EBIT adj.
in m €
in m €
10.1%
9.6%
10.5%
9.9%
8.8%
+1%
81
271
268
8.7%
186
9M / 2013
9M / 2014
9M / 2013
-1%
80
189
9M / 2014
Group margin
OEM
MTU Investor Relations
MRO
OEM margin
MRO margin
30
Appendix
US$ Exchange Rate / Hedge Portfolio
Hedge book as of November 25, 2014
Hedging Model
in mUS$
US$ Exposure
• Approx. 75% of US$ revenues are
covered with US$ costs via
procurement (“natural hedging”).
• US$ sensitivity will rise over the
next years due to increasing net
US$ exposure
952
(=95%)
720
(=68%)
480
(=43%)
210
(=17%)
Average
hedge rate
(US$/EUR)
EBIT
sensitivity
+/- 1ct
2014
2015
2016
2017
1.32
1.30
1.32
1.31
+/- ~€3 m
+/- ~ €5m
Rolling Hedging Model
• Exchange rate analysis and
new hedging contracts on a
quarterly basis
• Hedging period: 12 following
quarters
+/- ~€7 m
• For MTU hedging remains an instrument for risk mitigation
• Sensitivity pre hedging: 10 ct move in US$/€ exchange rate has an impact of € ~ 60m on EBIT (2014)
MTU Investor Relations
31
Appendix
Technical Milestones GTF Programs
*
*) EIS = entry into service
MTU Investor Relations
32
Appendix
The GTF Competitive Advantage
GTF relative to Direct Drive Turbofan:
Direct Drive Turbofan DDTF
 25% less stages
 45% less airfoils
 lower cycle temperature
Config 1-3-10-2-7
78 in Fan Diameter
= lower maintenance cost
 higher propulsive efficiency
 higher low spool component efficiencies
 shorter & lighter
= 3% less fuel burn
81 in Fan Diameter
Config 1-G-3-8-2-3
 3 to 4 dB quieter (EPNdB, cum.)
Geared Turbofan GTF
The GTF concept achieves a significant competitive advantage over the DDTF.
MTU Investor Relations
33
Appendix
Commercial Engine Fleet
Aircraft Segment Engine
Program Share
Aircraft Application
Widebody
(50 – 120 klb)*
GP7000
PW4000G
CF6-80C
Genx
CF6-80E
CF6-50/80A
GE9x
22.5%
12.5%
9.1%
6.6%
n.n.
n.n.
4%
A380
B777
B747-400, B767, Boeing MD-11, A310
B787 Dreamliner, B747-8
A330
DC 10-30, B767, A310
B777x
Narrowbody
(20 – 50 klb)*
PW2000
PW1100G
PW6000
V2500
JT8D-200
21.2%
18%
18%
16%
12.5%
B757, C-17
A320neo
A318
A320 family, Boeing MD-90
Boeing MD-80 range
Regional Jets
(13 - 24 klb)*
PW1500G
PW1700/1900G
PW1200G
PW300
17%
15-17%
15%
25% (PW305/306)
15% (PW307)
25%
15%
Bombardier CSeries
Embraer E-Jet Gen 2
MRJ
Learjet 60, Do328 JET, Gulfstream G200, Hawker
1000, Dessault Falcon 7X, Cessna Sovereign
Cessna Bravo, Cessna Excel
Gulfstream G500, G600
Business Jets
(3 - 16 klb)*
PW500
PW800
* Thrust Range
MTU Investor Relations
34
Appendix
Military Engine Fleet
Aircraft Segment Engine
Program Share
Aircraft Application
Fighter
Aircraft
EJ200
30%
Eurofighter Typhoon
RB199
40%
Panavia Tornado
F414/F404
4.4 / 1.5%
F414: F/A-18 E/F Super Hornet; EA-18G Growler
F404: F/A-18 A/B/C/D, T50 Trainer; JAS-39 (Gripen)
Light Combat Aircraft (LCA)
Transport
Aircraft
TP400
22.2%
A400M
Helicopter
MTR390
40%
Eurocopter Tiger
GE38
18.4%
CH-53K (US-HTH)
MTU Investor Relations
35
Appendix
Commercial MRO Business:
Top 10 Engine MRO Providers 2013 – Estimated Number of Engines Under Contract
Top 10 providers*
MRO Provider
Market Share
1.
GE Engine Services
~21%
2.
Rolls-Royce
~11%
3.
MTU Maintenance
4.
Pratt & Whitney
5.
Lufthansa Technik
6.
Snecma
7.
Air France / KLM
~4%
8.
Delta TechOps
~3%
9.
Standard Aero
~2-3%
10.
8%
~7%-8%
~-7%
~4-5%
American Airline
~2%
* Source: ACAS as of 02/2014; *commercial jets, excl. turboprops and business jets
MTU Investor Relations
36
Appendix
Financial Calendar 2015 & IR Contact
February 12, 2015
Conference Call
Full year results 2014
April 28, 2015
Conference Call
Q1 2015 results
October 22, 2015
Conference Call
Q3 2015 results
2015
April 15 2015
Annual General Meeting
for the fiscal year 2014
July 23, 2015
Conference Call
Q2 2015 results
Nov / Dec, 2015
Investor and
Analyst Day
Michael Röger
Claudia Heinle
Alexander Gedler
Vice President Investor Relations
phone: +49 89 14 89-8473
email: [email protected]
Senior Manager Investor Relations
phone: +49 89 14 89-3911
email: [email protected]
Senior Manager Investor Relations
phone: +49 89 14 89-2153
email: [email protected]
MTU Investor Relations
37
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 cause actual results, performance
or events to differ materially from those expressed or implied in such statements. In addition to statements that are forward-looking by reason of
context, the words “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “forecast,” “believe,” “estimate,” “predict,” “potential,” or “continue”
and similar expressions identify forward-looking statements.
Actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) competition from other
companies in MTU’s industry and MTU’s ability to retain or increase its market share, (ii) MTU’s reliance on certain customers for its sales, (iii) risks
related to MTU’s participation in consortia and risk and revenue sharing agreements for new aero engine programs, (iv) the impact of non-compete
provisions included in certain of MTU’s contracts, (v) the impact of a decline in German or other European defense budgets or changes in funding
priorities for military aircraft, (vi) risks associated with government funding, (vii) the impact of significant disruptions in MTU’s supply from key
vendors, (viii) the continued success of MTU’s research and development initiatives, (ix) currency exchange rate fluctuations, (x) changes in tax
legislation, (xi) the impact of any product liability claims, (xii) MTU’s ability to comply with regulations affecting its business and its ability to respond
to changes in the regulatory environment, (xiii) the cyclicality of the airline industry and the current financial difficulties of commercial airlines, (xiv)
our substantial leverage and (xv) general local and global economic conditions. Many of these factors may be more likely to occur, or more
pronounced, as a result of terrorist activities and their consequences.
The company assumes no obligation to update any forward-looking statement.
Any securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”),
and may not be offered or sold without registration thereunder or pursuant to an available exemption therefrom. Any public offering of securities of
MTU Aero Engines to be made in the United States would have to be made by means of a prospectus that would be obtainable from MTU Aero
Engines and would contain detailed information about the issuer of the securities and its management, as well as financial statements.
Neither this document nor the information contained herein constitutes an offer to sell or the solicitation of an offer to buy any securities.
These materials do not constitute an offer of securities for sale in the United States; the securities may not be offered or sold in the United States
absent registration or an exemption from registration.
No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will not be accepted.
MTU Investor Relations
38