Munich- MTU Aero Engines AG generated revenue of EUR1,180 million in the first quarter of 2022. That was 19% more than in the prior-year period (1-3/2021: EUR989 million). The operating profit1 was 52% higher at EUR131 million (1-3/2021: EUR86 million). The adjusted EBIT margin was 11.1%, compared with 8.7% in the first quarter of 2021. Net income2 rose by 60% from EUR58 million to EUR93 million.
'MTU returned to a growth trajectory in 2021 and was able to continue this successfully in the first quarter of 2022,' said Reiner Winkler, CEO of MTU Aero Engines AG. In view of this, the company is confirming its guidance for the 2022 fiscal year. Winkler: 'We are continuously monitoring the impact of the coronavirus pandemic and the war in Ukraine. If necessary, we will adjust our guidance.' So far, MTU has recognized impairment losses of around EUR52 million in connection with the sanctions on Russia. That includes about EUR40 million on the PW1400G-JM engine for the Irkut MC-21 and, to a smaller extent, impairment losses on receivables. The impairment losses are included in the adjustments for adjusted EBIT.
In the first quarter of 2022, MTU recorded the strongest revenue growth in the military engine business, where revenue rose by 25% to EUR108 million (1-3/2021: EUR87 million). 'That reflects the postponement of EJ200 deliveries from the fourth quarter of 2021 to the first quarter of this year,' said Winkler. The main revenue driver was the EJ200 engine for the Eurofighter.
Revenue from commercial maintenance rose by 21% to EUR819 million (1-3/2021: EUR678 million). The most important revenue generators were the V2500 for the classic A320 aircraft family and the PW1100G-JM engine for the A320neo.
Revenue from the commercial engine business increased by 11% from EUR250 million to EUR278 million. On a dollar basis, the spare parts business registered organic revenue growth in the high-teens percentage range, while organic growth in the commercial series business declined by around 15%. 'Revenue from series business mainly reflects lower deliveries of the Geared Turbofan and the GEnx,' explained Winkler. 'We assume that GTF deliveries, in particular, will recover in the coming months.' The main source of revenue in the commercial engine business was the PW1100G-JM.
At the end of the first quarter, MTU's order backlog rose to a new record of EUR23.4 billion, 5% higher than at year-end 2021 (December 31, 2021: EUR22.2 billion). The majority of orders were for the V2500 and the Geared Turbofan engines of the PW1000G family, especially the PW1100G-JM.
Earnings improved in both the OEM business and the commercial maintenance business.
Quarterly earnings from the OEM business rose by 66% from EUR47 million to EUR78 million. The adjusted EBIT margin increased from 14.0% in the first quarter of 2021 to 20.2% in the first quarter of 2022. 'This clear rise in earnings was due to a mix of higher military and spare parts business, whereas the series business declined,' said CFO Peter Kameritsch.
In the commercial maintenance business, quarterly earnings rose by 34% to EUR53 million (1-3/2021: EUR39 million). The adjusted EBIT margin was 6.4%, compared with 5.8% in the prior-year period. Kameritsch: 'The improved margin is the result of the favorable revenue mix in the first quarter: The proportion of maintenance work in our core business relative to maintenance work on the GTF engines was above the ratio we anticipate for the full year.'
In the first quarter of 2022, research and development expenses amounted to EUR63 million (1-3/2021: EUR47 million). MTU's R&D activities are focused on improving the performance of the Geared Turbofan programs, technology studies for future engine generations, especially hydrogen and flying fuel cells, and digitalization of engine construction.
The free cash flow was EUR134 million in the first quarter, compared with EUR106 million in the prior-year period. 'Following on from the good fourth quarter of 2021, we registered high cash inflows from customers in the first quarter of 2022. The strong start to the year is a result of that, together with dividend payments from associated companies,' said Kameritsch.
Net capital expenditure on property, plant and equipment rose by 62% from EUR23 million to EUR38 million in the first quarter.
MTU had 10,683 employees at the end of the first quarter (December 31, 2021: 10,508 employees). 'Our good prospects in both the OEM and the MRO business will be reflected in an increase in our headcount,' said Winkler. 'Moreover, we are hiring staff to build up our site in Serbia.' MTU Maintenance Serbia is scheduled to start operating at the end of 2022.
MTU is confirming its guidance for the 2022 fiscal year. The company expects revenue to be between EUR5.2 billion and EUR5.4 billion at year end. Adjusted EBIT should increase in the mid twenty-percent range. Net income should rise in line with operating profit. MTU expects the cash conversion rate, which shows the ratio of free cash flow to adjusted net income, to be in the mid to high double-digit percentage range in 2022 (2021: 70%).
MTU Aero Engines - Key data for the first quarter of 2022 (Amounts in EUR million)
MTU Aero Engines
As of March 2021 As of March 2022 Change
Revenue 989 1,180 19%
thereof OEM business 337 386 15%
thereof commercial engine business 250 278 11%
thereof military engine business 87 108 25%
thereof commercial maintenance 678 819 21%
Adjusted EBIT 86 131 52%
thereof OEM business 47 78 66%
thereof commercial maintenance 39 53 34%
Adjusted EBIT margin 8.7% 11.1% 5.8%
in the OEM business 14.0% 20.2% 6.4%
in commercial maintenance
Adjusted net income 58 93 60%
Net income (reported) 49 53 9%
Earnings per share (basic, reported) 0.91 0.99 9%
EBITDA (reported) 142 174 23%
Free cash flow 106 134 27%
Research and development expenses 47 63 34%
thereof company-funded 36 6 28%
thereof customer-funded 11 17 55%
Company-funded R&D expenses as stated in the income statement
16 24 52%
Net capital expenditure on property, plant and equipment
23 38 62%
Dec. 31, 2021 March 31, 2022 Change
Balance sheet key figures
Intangible assets 1,128 1,137 1%
Cash and cash equivalents 722 837 16%
Pension provisions 948 947 0%
Equity 2,760 2,803 2%
Net financial debt 673 547 19%
Total assets and liabilities 8,304 8,487 2%
Order backlog 22,237 23,371 5%
Employees 10,508 10,683 2%
1 Adjusted EBIT = adjusted earnings before interest and taxes
2 Adjusted net income = adjusted income after income taxes
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. Actual results, performance or events may differ materially from those in such statements due to, without limitation, competition from other companies in MTU Aero Engines' industry and MTU Aero Engines' ability to retain or increase its market share, the cyclicality of the airline industry, risks related to MTU Aero Engines' participation in consortia and risk and revenue sharing agreements for new aero engine programs, risks associated with the capital markets, currency exchange rate fluctuations, regulations affecting MTU Aero Engines' business and MTU Aero Engines' ability to respond to changes in the regulatory environment, and other factors. Many of these factors may be more likely to occur, or more pronounced, as a result of terrorist activities and their consequences. MTU Aero Engines assumes no obligation to update any forward-looking statement.
Contact
Eckhard Zanger
Senior Vice President Corporate Communications and Public Affairs
Phone: +49 89 1489 9113
Cell: +49 (0) 176 100 06 158
eckhard.zanger@mtu.de
Eva Simon
Press Officer Finance
Phone: +49 (0)89 1489 4332
Cell: +49 (0) 176 100 841 62
eva.simon@mtu.de
MTU AERO ENGINES AG 
