MTU Aero Engines AG · XETR:MTX
MTU Aero Engines — Investor Presentation (February 2022)
50 slides from MTU Aero Engines's investor presentation, February 2022
Slide 1: MTU Aero Engines AG – Investor Presentation
Driven by visions of tomorrow. MTU Aero Engines AG – Investor Presentation February 2022
Slide 2: Contents
Contents Click to chapters 1 At a glance 2 Track record 3 Market position 4 Portfolio strategy 5 Financial outlook 6 Appendix
Slide 3: At a glance
We shape the future of aviation. At a glance As MTU, we are not only an essential part of the aviation industry today, we are contributing to the success story of tomorrow's industry with some of the world's most innovative aircraft engines technology.
Slide 4: What we do / How we do
What we do Design, development, production and support of aircraft engines in all thrust categories Fiscal year 2021: Commercial business: 30% of aircraft have MTU technology on board Revenue around € 4 billion, EBIT adj. € 416 million Military business: full system capability, for more than 80 year
Slide 5: MTU is built on excellence in these three pillars
MTU is built on excellence in these three pillars Commercial OEM business Military OEM business Commercial MRO business* • Revenues: ~ € 1.1 billion (24 %)** • Revenues: ~ € 0.5 billion (11 %)** • Revenues: ~ € 2.7 billion (65 %)** • Decades of partnerships with OEMs • European and U.S. engine progr
Slide 6: Track Record
We are Germany’s leading manufacturer in the engine industry. Track Record We are one of the pioneers of the aviation industry and are firmly established in the market as a leading manufacturer of aircraft engines and member of the DAX stock index.
Slide 7: MTU looks back on many important names from the German industrial history
MTU looks back on many important names from the German industrial history – from 1934 to date 1934 1969 2005 Today BMW Flugmotorenbau GmbH MTU MTU goes public MTU Aero Engines is founded 50% Daimler Benz is admitted to the DAX, 50% MAN Germany‘s primary stock index 1989 1965 MTU becomes an affiliate
Slide 8: MTU is an essential partner in the engine value chain
MTU is an essential partner in the engine value chain Engine Subsystem/ Material component module Engine suppliers* suppliers* suppliers* OEMs* Airframers* Airline operations MRO Engine MRO OEM market Aftermarket *selected market participants 8 © MTU Aero Engines AG. The information contained herein
Slide 9: A balanced portfolio in all thrust categories ensure MTU's long-term success
A balanced portfolio in all thrust categories ensure MTU’s long-term success Programs + Entry into service CF6-80, LM6000 V2500 A320, MD-90, KC-390 747, 767, IGT, A300, A310, A330 01 MTU outperforms the market in three of the four market segments by: PW300, PW500 • Securing and expanding market Cumu
Slide 10: Market position
Stability through unique market positioning. Market position 2020-2021 was a test for the entire industry. We have proven resilience in the most severe aviation crisis since the end of the Second World War and are ready to further shape the future of aviation.
Slide 11: The Aero Engine Industry
Characteristics • Industry players are specialized in different modules and technologies • Oligopolistic structure of market • OEM business and MRO are perfect supplements The Aero Engine Industry • New engine deliveries are almost EBIT neutral, spare parts business is the main value driver for the
Slide 12: MTU's unique market position
OEM • Strategic long-term partnership with Pratt & Whitney in the narrowbody market (LPT/HPC) secures growth opportunities • Partnership on large engines for hot section parts (TCF) MTUs unique with General Electric ensures product diversification market position • BizJets/Regional/Narrowbodies the
Slide 13: The recovery of the commercial aviation already started
The recovery of the commercial aviation already started Crisis phase – year 2020 Restart phase – years 2021-23 Growth phase – years 2024+ • Traffic down 66%, slow recovery since Q2 • Air traffic begins recovery • Traffic growing above 2019 levels • High storage rates • Modern and efficient aircraft
Slide 14: Most analysts expect a traffic recovery by 2024
Most analysts expect a traffic recovery by 2024 Global Passenger Traffic 120 RPKs (Revenue Passenger Kilometer) 2019 indexed to 100 100 80 Long term fundamentals remain intact • Industry has recovered from past downturns every time throughout its history 60 • Emerging markets are expected to continu
Slide 15: Product portfolio and strategy
Product portfolio and strategy MTU has left its mark on commercial and military aviation Leading technology for with leading-edge technology. Today, we are working on core engine modules. engines that will make the goals of climate neutrality a reality.
Slide 16: Leading technology for core engine modules and production processes
Leading technology for core engine modules and production processes • Fastrunning Low-pressure Turbine (LPT), High-pressure Compressor (HPC) and Turbine Center Frame (TCF) • MTU as role model for automation in aero engine manufacturing (Blisk production centre, Rotor2, Electrochemical machining (ECM
Slide 17: MTU focuses on five core engine competencies
MTU focuses on five core engine competencies – three core components and on unique manufacturing and maintenance processes High-pressure Manufacturing compressor (HPC) Low-pressure turbine (LPT) Maintenance Turbine center frame (TCF) 17 © MTU Aero Engines AG. The information contained herein is prop
Slide 18: Network strategy with focus on cost leadership and operational excellence
Network strategy with focus on cost leadership and operational excellence High-tech Mid-tech, Best-cost Raw materials, Network shift MTU Aero Engines, MTU Aero Engines Mid-Low Tech to best-cost Munich Polska Suppliers locations • Development/compliance hardware • Expansion to static parts with • Raw
Slide 19: In the commercial OEM MTU expands its position in all market segments
In the commercial OEM MTU expands its position in all market segments Business jets Regional jets Narrowbodies Widebodies Source: Boeing Market position Market share will Excellent Adding the biggest and improved increase from market position will strongest engine to the 0 % to 90 % further improve
Slide 20: MTU's fleet mix is proving resilience
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 21: MTU is well positioned in the international military aircraft market
MTU is well positioned in the international military aircraft market Stable pillar during the Corona crisis – Fighter engines are key revenue contributors Fighter Transport Helicopter 141 Eurofighters* and 85 Tornados 176 A400M ordered, thereof CH53-K entry into service 2021 in service in Germany >
Slide 22: MTU's participation in the FCAS engine program secures future revenue growth
MTU’s participation in the FCAS engine program secures future revenue growth Highlights • Successor for Eurofighter / Rafale • Biggest European defense program • 50:50 JV EUMET signed by MTU and Safran in April 2021 • ITP joined as a main partner Volume of 1,000+ • Concept phase contracted in 2019,
Slide 23: 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 – 2021 (in bn US$) MTU Zhuhai 100% MRO report
Slide 24: MTU is one of the world's leading service providers
MTU is one of the world’s leading service providers Efficient flowline production in Hannover Advanced GP7000 tested Partnership with China Southern Airlines Direct customer business OEM partnerships Airline partnerships Analysis, consulting and Standardization and industrialization MRO know-how: en
Slide 25: MTU offers minimized maintenance costs and the best possible engine value retention
MTU offers minimized maintenance costs and the best possible engine value retention Market trends Benefits • Ongoing demand for independent solutions as an alternative to OEM aftermarket services • Increasing focus on newer engine models 1 Long-standing expertise and market leadership as an independ
Slide 26: Standardized maintenance solutions for OEMs
In the more recent programs, MTU increasingly supports the OEMs, providing standardized maintenance solutions Benefits 1 Long-term partner in the OEM network Market trends 2 Reduction of expenses throughout the lifecycle and investments • Current OEM MRO market share is around 56%, tendency further
Slide 27: MTU's unique MRO expertise makes it a preferred airline partner
MTU’s unique MRO expertise makes it a preferred airline partner – together with China Southern, MTU has built up the No. 1 shop in China Benefits 1 Local presence with high MTU quality standards Market trends 2 Access to additional MRO business outside the home market • Strong growth of new airlines
Slide 28: Long-term MRO strategy with clear focus on future profitable growth
Long-term MRO strategy with clear focus on future profitable growth Customer-focused service Next level digital Expansion of MRO network and product portfolio maintenance solutions structure with focus on best-cost • Customers value MTU’s know-how, • Engine Fleet Management (CORTEX) • Capacity share
Slide 29: Aviation must reach climate neutrality by 2050
To reach the ambitious goals of the Paris climate agreement aviation must reach climate neutrality by 2050 • In the past, targets in the aviation sector mainly concentrated on • In the future, the focus will be on the entire climate the impact of CO2 emissions. impact. • CLAIRE*) roadmap was focused
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% 30 © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group compani
Slide 31: Strategy for sustainable aero engines
Strategy for sustainable aero engines 31 © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies.
Slide 32: Financials and outlook
We have proven to be resilient. Financials and outlook In recent years, we have proven resilience in a challenging market environment. From here, we start the future with a diversified portfolio and a considerable investment in new technologies.
Slide 33: Financial strength
Financial strength • Strong balance sheet with a healthy leverage and high level of liquidity • Diversified funding mix – no short-term refinancing required • Resilience proven in crisis years 2020-2021 • Investment grade rating • Moody's: Baa3 (negative) • Fitch: BBB (stable) Sets the ground for ou
Slide 34: 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: EBIT adj. OE 5.2 – 5.4 bn € Up mid twenties % MRO CCR Net Income adj. Mid to high Growth in line double digit % Commercial Spares Commercial MRO with EBIT a
Slide 35: Mid term outlook 2021 – 2024
Mid term outlook 2021 – 2024 Improved free cashflow conversion confirmed – back on growth path Organic revenue CAGR 2021-2024 Military Commercial OE Up mid single digit % Up mid to high teens % Revenue EBIT adj CCR* OE MRO Steady Exceeding High double growth 2019 level digit % Commercial Spares Comm
Slide 36: MTU's cash deployment strategy – Priorities
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 37: In a nutshell – Key arguments in favor of the MTU share
In a nutshell – Key arguments in favor of the MTU share from an investor's perspective Well established Despite intermediate Excellent technological Strong barriers to position as global COVID 19 impact, Key investment position with clear enter into an supplier of engine aviation has excellent highl
Slide 38: Appendix
Appendix In our appendix you will find some more important financial data and further information. If you miss any information, please let us know.
Slide 39: Key Financials
Key Financials Revenues EBIT adjusted Net Income adjusted Free Cashflow / CCR***) [m €] (EBIT Margin) [m €] [m €] [m €] 4,628 -14%* 4,188 757 (16.4%) 3,977 +5%** -45% 538 -45% 358 (67%) 468 -71% 416 (11.2%) 342 (10.5%) 240 294 (70%) +13% +16% 105 (36%) +130% FY 2019 FY 2020 FY 2021 FY 2019 FY 2020 F
Slide 40: Strong balance sheet provides good cushion – key credit figures
Strong balance sheet provides good cushion against current volatile market environment – key credit figures Net Financial Debt Equity EBITDA Free Cashflow [m €] [m €] [m €] [m €] 2.760 2.635 2.421 961 965 358 781 712 673 612 240 105 FY 2019 FY 2020 FY 2021 FY 2019 FY 2020 FY 2021 FY 2019 FY 2020 FY
Slide 41: MTU's debt profile
MTU‘s debt profile Loan Details Amount Coupon Issue date Maturity Convertible Bond 2016 52.3 m€* 0.125% 17 May 2016 17 May 2023 Conversion Price € 123.3222 (Premium 50%) Revolving Credit Facility 600 m€ Customary market reference rates plus an additional margin; 28 Oct 2023 unused credit facilities
Slide 42: US$ exchange rate / Hedge portfolio
US$ exchange rate / Hedge portfolio Hedge book as of February 16th, 2022 [in m$] Hedging Model – US$ Exposure • Approx. 75% of US$ revenues are covered with US$ costs via procurement (“natural hedging”) 1.200 • US$ sensitivity will rise over the next years due to increasing net US$ exposure 900 Roll
Slide 43: Sustainable partnerships are the basis for long-term success
We consider sustainable partnerships to be the basis for long-term success Research & Production Programs Service Development • 6 centers of competence • 6,300 suppliers • Pratt & Whitney • Airline customers • 17 cooperations with • Long-term partnerships • General Electric • OEM networks universiti
Slide 44: About 10,000 of the most innovative and competent engine experts worldwide
We boast about 10,000 of the most innovative and competent engine experts worlwide More than 60 Approx. 14 years Approx. 80% More than 300 different nations is the average job tenure of the total apprentices at work under the umbrella of MTU’s workforce workforce are German locations of MTU Aero Eng
Slide 45: Commercial engine fleet
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% B777X Narro
Slide 46: Military engine fleet
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 T408 18.4
Slide 47: MTU Management Board
MTU Management Board Reiner Winkler Peter Kameritsch Michael Schreyögg Lars Wagner Chief Executive Officer Chief Financial Officer & Chief Program Officer Chief Operating Officer Chief Information Officer • CEO at MTU Aero Engines AG • Member of Executive Board acting • Member of Executive Board sin
Slide 48: Financial calendar 2022 & IR contact
Financial calendar 2022 & IR contact Thomas Franz Vice President Investor Relations 16.2. 29.4. 05.5. Phone: +49 89 14 89-4787 E-Mail: [email protected] Conference Call Conference Call Annual General Meeting Full year results 2021 Q1 2022 results (virtual) for the fiscal year 2021 Claudia Heinle S
Slide 49: 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 50: 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
MTU Aero Engines — Investor Presentation (February 2022) on 6ix