MTU Aero Engines (MTX) Q2 2024 earnings summary

Executive summary

• Passenger traffic grew 9.1% in June, with international up 12.3% and domestic up 4.3%, supporting strong demand in aviation.

• Supply chain challenges persist, limiting new aircraft production, but parts availability and MTU's supply chain are improving.

• GTF Fleet Management Plan is progressing, with improved turnaround times, lower-than-expected aircraft on ground, and customer settlements advancing.

• Major commercial and military contract wins, including an $800 million order at Farnborough Airshow, new Eurofighter and helicopter engine programs, and a major order from Cebu Pacific.

• Order backlog reached €25.2 billion, up 3.4% from year-end 2023, supporting a strong production pipeline.

Financial highlights

• Adjusted group revenues rose 10% year-over-year to €3,429 million in H1 2024; EBIT adjusted increased 16% to €470 million (13.7% margin).

• Adjusted net income up 14% to €342 million; adjusted EPS up 13% to €6.31.

• Free cash flow at €105 million, down from €135 million in the prior year, mainly due to higher capital expenditures and working capital.

• Order book increased 3% to €25.2 billion as of June 30, 2024.

• Cash and cash equivalents rose 29.7% to €1,146 million since December 2023.

Outlook and guidance

• Full-year group revenue outlook unchanged at €7.3–7.5 billion; underlying FX rate $1.10 per euro.

• Adjusted EBIT margin expected at around 13%, higher than initially anticipated due to favorable business mix.

• Free cash flow guidance remains a low triple-digit million euro, reflecting ongoing volatility and pending airline compensation payments.

• Military revenues projected up low to mid-teens %, commercial OE up low to mid-twenties %, commercial spares up low teens %, and commercial MRO up mid to high teens %.

• MRO segment GTF work share revised to 35% due to lower material intensity per shop visit.