In the fourth quarter of the fiscal year, MTU Aero Engines surpassed analysts’ expectations with strong revenue and earnings performance. Despite challenges related to Pratt & Whitney engines leading to reduced shareholder returns, the German aircraft-engine manufacturer reported impressive figures.
Revenue and Profit Figures
- Adjusted revenue reached 1.72 billion euros, showing significant growth from EUR1.51 billion in the same period last year.
- Net profit saw a notable increase to EUR215 million compared to EUR121 million previously.
- However, adjusted net profit slightly decreased to EUR155 million from EUR156 million.
Profitability Metrics
- Adjusted earnings before interest and taxes (EBIT), MTU’s preferred profitability measure, rose to EUR221 million, up from EUR207 million, resulting in a 12.9% adjusted margin.
Analysts’ Projections
Analysts had forecasted lower figures compared to MTU’s actual performance:
- Adjusted revenue of EUR1.68 billion
- Adjusted net profit of EUR162 million
- Adjusted EBIT of EUR218 million
CEO Statement
Despite facing challenges like the Geared Turbofan fleet management plan, which impacted reported earnings negatively for the first time in MTU’s history, Chief Executive Lars Wagner emphasized the company’s operational strength, as evidenced by the strong adjusted results.
Recap of Pratt & Whitney’s Engine Recall
Last year, RTX, the parent company of Pratt & Whitney, issued a recall of hundreds of jet engines for inspection due to a metal fault that could result in cracking. These engines include key components supplied by MTU for Pratt’s geared-turbofan engines, which are utilized in aircraft like Airbus’s A320neo.
Impact on MTU’s Operations
MTU acknowledged that the engine recall would have a negative impact on revenue and EBIT in 2023, with the bulk of the liquidity effect expected from 2024 to 2026. Despite this challenge, MTU remains committed to investing in both sites and technologies.
Dividend Adjustments
Due to the aforementioned factors, MTU revealed that it may not be able to maintain its current dividend levels between 2024 and 2026. It also stated that it will no longer target a payout ratio of 40% of adjusted net income during this period. The proposed dividend for 2023 stands at EUR2 per share, a decrease from the previous year’s EUR3.20 per share.
Future Projections
Looking ahead to 2024, MTU anticipates revenue figures ranging between EUR7.3 billion and EUR7.5 billion, with an adjusted EBIT margin exceeding 12%. Despite the challenges faced, MTU’s CEO, Wagner, remains optimistic about the company’s growth prospects for the upcoming year.
Conclusion
The uncertainties brought about by the engine recall have prompted MTU to reevaluate its dividend policies and focus on sustaining growth and profitability in the years to come.