MTU Aero Engines AG (MTU) has released at its Capital Market Day that: “In the short and long term, the prospects for growth in all business units are better than originally assumed” with net income to rise steadily along with further improvements in free cash flow.
Commercial new engine business looks to be the fastest growing segment with a low-teen income increase, while engine parts’ revenue is expected to increase in the mid-to-high single-digit percentage range. Military business revenue is anticipated to increase by around ten percent. Commercial maintenance business should remain at the same high level as 2018.
The group expects its EBIT margin to remain stable in 2019, despite the strong in-crease in the new engine production, a business which has a negative impact on earnings. MTU estimates that the cash conversion rate will reach around 50 to 60%, thus improving in line with expectations. According to CFO Peter Kameritsch: “Changes in the invoicing process as of 2019 will moderate MRO revenues. If calculated on a comparable basis, the 2019 outlook for the MRO business is high single-digit percentage growth.”
Reiner Winkler stated that: “Current market indicators and the group’s positioning give us reason to assume that this trend will continue and that it will have a positive impact on our business prospects through to 2025.” Given the outstanding sales record of engines in MTU’s OEM portfolio, the company expects to see a further increase in its production output over the next few years. Michael Schreyögg, the chief program officer commented that: “We have identified potential for growth in all market segments.”