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MTU AERO ENGINES AG
MTU AERO ENGINES AG
Strong performance even based on real numbers
28 Oct 16
The company reported Q3 16 results. Revenues increased 4.5% to €1.1bn and the order backlog declined 8% to €11.15bn. The gross margin improved from 14.9% to 15.6%. Real EBIT increased 19.1% to €117.4m and the EBIT margin improved from 9.3% to 10.7%. Also, the EBITDA margin increased from 13% to 13.6%. Adjusted EBIT according to the company rose 16.1% to €139.7m and the adjusted EBIT margin increased from 11.4% to 12.7%.
Guidance marginally increased
26 Jul 16
In Q2 16, revenues increased 9% to €1.2bn and the gross profit jumped 12.6% to €164.2m. The gross margin increased from 13.2% to 13.7%. EBITA improved 3.4% to €146.7m and the EBITDA margin declined from 12.6% to 12.2%. The EBIT margin also declined from 8.9% to 8.6% but EBIT increased 6.3% to €103.7m. Adjusted EBIT grew 6.7% to €122.8m and the adjusted EBIT margin declined from 10.4% to 10.2%. Net income plummeted 17.8% to €68.2m. Real EPS declined 17.3% from €1.62 to €1.34, whereas adjusted EPS increased 6.5% from €1.55 to €1.65. The total order backlog before consolidation reached €11,544m representing a two and a half years production workload. The majority of the backlog is orders for the V2500 and the PW1000G-JM (Airbus 320neo).
MRO business is driving the performance
29 Apr 16
MTU reported Q1 16 results. Revenues remained stable at around €1.1bn. Revenues of the high margin MRO business, however, grew 11.7% to €428.8m. Revenues of the OEM commercial business division declined 12.5% to €556m but increased 36.5% to €124.5m in the OEM Military business division. The order backlog before consolidation declined 4.9% to €11.88bn. The order backlog for the commercial engine business declined 6.6% to €5.9bn, representing a workload of up to 2.5 years. In the aviation industry, the total order backlog of Airbus and Boeing reached 13,200 aircraft representing a workload of 7 to 8 years.
Nothing new from the AGM!
15 Apr 16
At the AGM (14 April 2016) management discussed the capacity increase for producing turbines, compressors and other modules for the new A320neo. The total number of modules, not engines, will increase from 2,000 in 2015 to 4,000 in 2020. This information, however, is not new and was already discussed last year. In August 2015, Airbus reported an order backlog for the A320neo of around 4,100 aircraft (8,200 engines). Pratt & Whitney reported a total order backlog of 7,000 GTF (geared turbofan) orders, of which around 2,800 will be used for the A320neo platform.
MRO business is driving the performance
16 Feb 16
The company reported preliminary results ending in December 2015. Revenues increased 13.3% to €4.44bn compared to €3.98bn in 2014. The order backlog rose 11.8% to €12.49bn. Adjusted EBIT increased 15.1% to €440.3m. EBIT of the OEM business division improved 7.1% to €285m and the commercial MRO (maintenance, repair, overhault) business 33.4% to €155.2m. Consequently, the EBIT margin of the OEM business declined from 10.1% to 9.8% and in the MRO business the adjusted EBIT margin increased from 9% to 9.8%. Net adjusted income increased 21.2% to €306.9m. Real net income, however, only rose 11.4% to €217.6m (estimate: €257.4m). The gap between virtual reality and the real world has widened further. The company is adding back all unpleasant cost items such as purchase price allocation write-downs, capitalised R&D costs and impairments even on a net income level.
28 Oct 15
MTU Aero continues to perform well ahead of the major civil volume ramp-ups. The current year is being boosted by favourable FX and lower R&D. However, medium- to long-term growth is being embedded by an increased participation in both existing engines and current development programmes and in terms of original equipment (OEM) and maintenance repair & overhaul (MRO) services. While the current investment constrains near-term returns on civil OEM activity, both sales and margins should rise significantly over the second half of the current decade.
07 Dec 16
Severfield’s (SFR’s) H117 results were well ahead of the previous year; margin performance and order book development cause us to raise our FY17 profit expectations. This combination has also proved to be a catalyst for share price outperformance following the results. Revenue growth and further margin development towards management’s stated aim of doubling FY16 PBT by 2020 can sustain further progress.
Focused on the long term
08 Dec 16
These are rare events but it is nice to see a management use its public listing advantageously to trade short-term dilution in EPS for the optionality of asymmetric upside in the long term. With over £10m already in the balance sheet, ABD has successfully raised £5.4m gross in a placing and expects to raise another £1m from an offer. We were not surprised to learn that the placing was over 3.5x oversubscribed. How many listed UK companies are positioned to take advantage of the digital revolution in the automotive industry? The additional investment in new people, facilities, products & services should be dilutive to FY2017-18 EPS but this is small price to pay to establish the leading supplier of integrated test, measurement and simulation solutions to the autonomous vehicle industry. Our forecasts assume that growth will accelerate from FY2019. We raise our target price to 575p based on 15x FY2019 EPS, equivalent to Ricardo, the only other UK stock which has embraced the optionalities offered by the technological changes in the automotive industry.
Exceptional trading continues
08 Nov 16
Keywords has announced that the strong trading in localisation and audio services has continued into H216. In particular, the Synthesis business acquired in April continues to benefit from exceptionally strong trading. Full-year results are now expected to be materially ahead of consensus and we upgrade our FY16e EPS by 13%. Erring on the side of caution, we have not changed our FY17 estimates significantly. Nevertheless, we believe the company does have a platform to sustain double-digit earnings growth, and hence medium-/long-term prospects for further share appreciation remain good.
08 Dec 16
Elderstreet stake acquired 02 GENERAL NEWS Globalworth premium In this issue Venture capital firm Draper Esprit has taken a 30.8% stake in venture capital trust manager Elderstreet. Both investment managers focus on the technology sector and they will be able to co-invest. Elderstreet has investments in a number of AIM-quoted companies through its VCTs. The purchase was funded by an issue of Draper Esprit shares worth just over £250,000. Simon Cook, the chief executive of Draper Esprit, is a former partner at Elderstreet so he knows the business and the people who run it, although he did leave more than 14 years ago. Cook has previously acquired portfolios from 3i and Cazenove, two other firms where he has worked. Draper Esprit has an option to acquire the remaining shares in Elderstreet, which has more than £25m under management. Adding Elderstreet to the group enables Draper Esprit to offer investors a range of EIS funds, VCTs and an ISA qualifying listed evergreen patient capital fund. The enlarged group has venture capital assets under management of more than £350m. At the end of September 2016, Draper Esprit had a net asset value of 352p a share, which is similar to the current share price. The June 2016 flotation price was 300p a share. Draper Esprit is quoted on Ireland’s Enterprise Securities Market as well as AIM.
02 Dec 16
On 30 September 2016, when the company announced its full year results, it reported that the UK business had seen a slow start to the year, with particular weakness in repair and renewal spending by the NHS as well as “reticence” in the education sector. However, with the UK only representing about a third of the business, this weakness was expected to be more than offset by the positive effect of a weakened sterling on its overseas business, given the benefits for competitiveness and margins.