MTU Aero Engines AG: Company Strategy & Performance Analysis
Summary MTU Aero Engines is a leading manufacturer of low-pressure turbines, high-pressure compressors, and turbine centre frames. The company designs, develops, manufactures, and markets commercial and military aircraft engines. Additionally it also develops gas turbines for marine propulsion, mechanical drive, and electrical power generation applications. MTU Aero Engines conducts its business operations through OEM and MRO segments. The OEM segment designs, develops, manufactures, and markets mainly commercial and military aircraft engines. Its MRO segment provides commercial maintenance services to jet and military engines, and industrial gas turbines. MTU Aero Engines has a wide geographical presence across North America, Germany, Europe Asia, and other regions.
MarketLine Premium’s company strategy reports provide in-depth coverage of the performance and strategies of the world’s leading Civil Aerospace companies. The report details company operations in key geographies and offers a comprehensive analysis of each firm’s growth strategy and financial performance. The reports benchmark company performance via key indicators, including order, order backlog, operating expense, operating income, net income, and MRO revenue.
Key Highlights MTU Aero Engines ranked seventh in terms of revenue in 2016
MTU Aero Engines reported an increase in its revenue from US$1,754.8 million in 2015 to US$2,116.4 million in 2016. It posted growth of 20.6% in 2016. The company stood second in terms of y-o-y growth, which can be attributed to various expansion initiatives taken by the company. For instance, in February 2017, MTU entered into an agreement with Lufthansa Technik to establish a joint venture company for the maintenance, repair, and overhaul of geared turbofan (GTF) engines. The market share of MTU increased from 3.9% in 2015 to 4.4% in 2016. GE Aviation occupied the market leader position in terms of revenue and market share. Its revenue increased from US$10,100.0 million in 2015 to US$11,400.0 million in 2016, growth of 12.9%. GE Aviation had market share of 23.5%.
Strong performance of MRO segment
MTU Aero Engines offers MRO services including commercial aircraft engine services, industrial gas turbine services, and military engine services. The revenue of the company’s MRO segment increased from US$1,746.8 million in 2015 to US$2,058.2 million in 2016, an increase of 17.8%. In actual currency terms, revenue increased by 18.3% over the same period. V2500 engines that power the A320 were the main revenue driver that contributed to the increase in the revenue of MRO segment in 2016. In addition to this, the CF34, which is utilized in diverse business and regional jet applications, is another major source of revenue for the MRO segment.
Strong liquidity position
MTU’s strong cash and liquidity position puts the company at an advantage when attempting to fund any potential market opportunities. MTU Aero Engine’s current ratio was 1.07 at the end of FY2016, significantly higher than 0.95 at the end of the FY2015. It was also higher than its competitors such as Safran SA, which recorded current ratios of 0.78 in FY2016. A higher current ratio than competitors indicates that the company is in a relatively strong liquidity position. At the end 2016, the company had total current assets of US$2,806.08 million (an increase of 24.2% over the previous year), with cash and equivalents worth US$89.5 million. Its current portfolio of capital leases also declined from US12.9 million in FY2015 to US$11.3 million in 2016.
Scope - Company Snapshot - Details key indicators and rankings of MTU Aero Engines AG in terms of revenue, net income, and operating income. - Company SWOT Analysis - Outlines MTU Aero Engines AG’s strengths, weaknesses, and opportunities and threats facing the company. - Growth Strategies - Provides an overview of MTU Aero Engines AG’s corporate goals, strategic initiatives and evaluates their outcomes. - Company Performance and Competitive Landscape - Analyses the company’s performance by geographical segment and provides a peer comparison on parameters such as revenue and market share. - Key Developments - Showcases MTU Aero Engines AG’s recent corporate events and initiatives. - ICT Spending Prediction - Details how the company allocates its ICT budget across the core areas of its business, specifically hardware, software, IT services, communications and consulting.
Reasons to buy - How does MTU Aero Engines AG rank among its peers in terms of revenue and market share? - What are MTU Aero Engines AG’s main growth strategies and how successful has the company been at implementing them? - How has the company performed since 2014? - How has MTU Aero Engines AG performed in comparison to its main competitors? - What are MTU Aero Engines AG’s strengths and weaknesses and what opportunities and threats does it face?
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