Quarterly Report • Apr 20, 2010
Quarterly Report
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MTU Aero Engines Holding AG, Munich
General Economic Environment
| 7 | The enterprise MTU |
|---|---|
| 10 | Research and development |
| 11 | Financial review |
| 11 | Key figures at a glance |
| 11 | Order Backlog and value of MRO contracts (order volume) |
| 13 | Operating results, financial situation and net assets |
| 19 | Operating segments |
| 21 | Capital expenditure |
| 22 | Employees |
| 23 | Opportunities and risk report |
| 23 | Report on significant transactions with related parties |
| 23 | Subsequent events |
| 24 | Consolidated Income Statement |
|---|---|
| 24 | Consolidated Statement of Comprehensive Income |
| 25 | Consolidated Statement of Financial Position |
| 26 | Consolidated Statement of Changes in Equity |
| 27 | Consolidated Statement of Cash Flows |
Group Segment Information
| Key Facts and Figures for the Group | |||||
|---|---|---|---|---|---|
| in € million (unless otherwise specified) | 2010 | 2009 | Change against previous year in € million |
in % | |
| Income Statement | |||||
| Revenues | 640.2 | 693.1 | -52.9 | -7.6 | |
| Gross profit | 115.1 | 118.8 | -3.7 | -3.1 | |
| Earnings before interest and taxes (EBIT) | 57.8 | 63.7 | -5.9 | -9.3 | |
| Adjusted earnings before interest and taxes | |||||
| (EBIT adjusted) | 68.8 | 75.2 | -6.4 | -8.5 | |
| Earnings before taxes (EBT) | 48.5 | 43.0 | 5.5 | 12.8 | |
| Earnings after taxes (EAT) | 32.6 | 31.0 | 1.6 | 5.2 | |
| Undiluted earnings per share (in €) | 0.67 | 0.64 | 0.03 | 4.7 | |
| Diluted earnings per share (in €) | 0.65 | 0.62 | 0.03 | 4.8 | |
| Growth rates in % | |||||
| Revenues | -7.6 | 10.0 | |||
| Gross profit | -3.1 | 7.8 | |||
| Adjusted earnings before interest and taxes | |||||
| (EBIT adjusted) | -8.5 | -6.0 | |||
| Earnings before taxes (EBT) | 12.8 | -34.8 | |||
| Earnings after taxes (EAT) | 5.2 | -29.9 | |||
| Undiluted earnings per share (in €) | 4.7 | -27.3 | |||
| Diluted earnings per share (in €) | 4.8 | -27.1 | |||
| Revenue margins in % | |||||
| Earnings before interest and taxes (EBIT) | 9.0 | 9.2 | |||
| Adjusted earnings before interest and taxes | |||||
| (EBIT adjusted) | 10.7 | 10.8 | |||
| Earnings before taxes (EBT) | 7.6 | 6.2 | |||
| Earnings after taxes (EAT) | 5.1 | 4.5 | |||
| Balance Sheet (previous year: December 31) | |||||
| Intangible assets | 1,244.4 | 1,248.2 | -3.8 | -0.3 | |
| Property, plant and equipment | 554.7 | 556.7 | -2.0 | -0.4 | |
| Financial assets | 97.1 | 26.5 | 70.6 | 266.4 | |
| Working capital | 193.3 | 147.6 | 45.7 | 31.0 | |
| Cash and cash equivalents | 84.1 | 120.8 | -36.7 | -30.4 | |
| Pension provisions | 413.7 | 411.6 | 2.1 | 0.5 | |
| Other provisions | 437.9 | 421.1 | 16.8 | 4.0 | |
| Financial liabilities | 307.1 | 279.8 | 27.3 | 9.8 | |
| Deferred taxes, current tax liabilities | 281.5 | 279.4 | 2.1 | 0.8 | |
| Equity | 750.8 | 730.7 | 20.1 | 2.8 | |
| Net debt | 135.8 | 142.4 | -6.6 | -4.6 | |
| Order backlog and value of MRO contracts | |||||
| (order volume) (previous year: December 31) | 9,263.7 | 8,843.1 | 420.6 | 4.8 | |
| Commercial and Military Engine business (OEM) *) | 4,237.1 | 3,965.1 | 272.0 | 6.9 | |
| Commercial Maintenance business (MRO) *) | 5,026.6 | 4,878.0 | 148.6 | 3.0 | |
| Cash flow | |||||
| Cash flow from operating activities | 51.2 | 59.8 | -8.6 | -14.4 | |
| Cash flow from investing activities | -92.5 | -24.4 | -68.1 | -279.1 | |
| Free cash flow | 31.7 | 35.4 | -3.7 | -10.5 | |
| Free cash flow margin (in %) | 5.0 | 5.1 | |||
| Cash flow from financing activities | 1.9 | -11.4 | 13.3 | 116.7 | |
| Change in cash and cash equivalents | -36.7 | 22.4 | -59.1 | -263.8 | |
| Number of employees at quarter end | 7,681 | 7,588 | 93 | 1.2 | |
| Commercial and Military Engine business (OEM) | 4,867 | 4,957 | -90 | -1.8 | |
| Commercial Maintenance business (MRO) | 2,814 | 2,631 | 183 | 7.0 |
*) before consolidation
Average number of employees including trainees by segment
OEM MRO
Growth rates for air traffic volumes were impressive at the end of 2009 and the beginning of 2010. If the upturn continues in this vein, it is likely that the growth rate will be back to the levels seen in 2008 within two to three months. This means that the recession would have caused the loss of two years of average growth.
According to IATA, worldwide passenger numbers grew by 9.5 % in February. This positive development varied from region to region. The growth rate in Europe and North America was approximately 4.5 %, while the economic regions of Asia (+13.5 %), the Middle East (+25.8 %) and Latin America (+8.5 %) recovered more quickly. The upturn reflected rising business travel activities, a postrecession pick-up in demand for private travel and the increase in inventories used in global trading. The overall air traffic volume was still 1 % to 2 % lower than in 2008.
International freight volumes grew in February in almost all regions by more than 30 %. Only Europe, with a growth rate of 7.2 %, has not yet been able to benefit fully from the worldwide upturn. The recovery has been driven primarily by the cyclical factors determining demand within the manufacturing industry and by the economic upturn in Asia and Latin America.
Capacities (i.e. the number of "seat kilometers" or "ton kilometers") grew in February 2010 at a slower rate than air traffic volumes, increasing by 1.9 % for passenger flights and 4.0 % for freight activities. These key indicators are important for assessing demand for MRO and spare parts business.
For the year 2010, the IATA predicts that airline revenues will rise by 9 % to US dollar 522 billion and that losses will be in the region of US dollar 2.8 billion. Compared to the previous prediction in December 2009, this means that losses have been halved. A shift has taken place in terms of seating classes: while the economy class has remained roughly at 2008 levels, the business class has decreased by 17 %. The economic upturn should result in stronger growth for premium class business.
The price of oil stabilized at the beginning of 2010 at around US dollar 80 per barrel. The global economic recovery is likely to put pressure on oil prices. That, combined with growing demand in Asia and the USA, will result in higher prices.
The order backlog and production rates of Airbus and Boeing remained stable during the first quarter. According to the Ascend Online database, the order-book of the two manufacturers at March 30, 2010 stood at 6,770 aircraft – 90 fewer than at the end of the fourth quarter 2009 (6,860 aircraft). Airbus and Boeing manufactured 221 commercial aircraft during the first three months of the year. Over the year as a whole, they plan to manufacture between 940 and 960 aircraft. This would be about the same as the level in 2009 when 978 commercial aircraft were delivered.
The order situation for business jets is extremely weak. Manufacturing volumes in 2009 were down by more than 30 %. The situation is likely to remain critical in 2010. Any recovery will depend on there being a substantial worldwide economic recovery. The critical factor for the sector is the availability of capital. A turnaround is not expected until 2011.
MTU Aero Engines Holding AG, Munich, together with its consolidated group of companies (hereafter referred to as "MTU", "group", "enterprise" or "company") is Germany's leading engine manufacturer and one of the world's largest.
MTU supports manufacturers and operators of commercial and military aircraft engines and aero-derivative industrial gas turbines throughout the entire lifecycle of these products, offering services ranging from development and manufacturing to distribution and maintenance.
The company is a technological leader in low-pressure turbines, high-pressure compressors, repair techniques and manufacturing processes. MTU is an influential partner in all important technology programs at national and international levels, and cooperates with the top names in the industry – General Electric, Pratt & Whitney und Rolls-Royce.
MTU is the world's largest independent provider of MRO services for commercial aero engines. In the military sector, for many decades it has been the leading company in the national market and the German armed force's industrial partner.
MTU's two operating segments are the OEM business (Original Equipment Manufacturing) and the MRO business (Maintenance, Repair and Overhaul).
The OEM business covers new commercial engine business, the supply of spare parts for commercial aircraft and the whole of the company's military business (new engines, spare parts and maintenance).
MTU is a risk-and-revenue-sharing partner in major commercial engine programs. This means that the company carries full responsibility for the components and modules it designs and manufactures – and also the financial risk. MTU receives a percentage of sales revenues in proportion to its stake in the respective program.
MTU's products for the commercial aero engine market cover all thrust and power categories and the most important components and subsystems. The company designs and manufactures modules and carries out final assembly work on complete engines. The focus of MTU's work on engine modules lies on low-pressure turbines and high-pressure compressors. MTU also develops and manufactures industrial gas turbines (IGTs). The commercial aero engines currently of greatest importance, alongside the longserving CF6 and PW2000, are the GP7000 for the Airbus A380, the V2500 engine which powers the Airbus A320 family, and the business jet engines PW300 and PW500. Significant future-oriented programs are the PW1000G geared turbofan family, destined for the Mitsubishi Regional Jet, the Bombardier CSeries and the Irkut MS-21, and the GEnx engine for the Boeing 787 and 747-8.
For the military engine market, MTU supplies basic technologies, develops and manufactures engine modules and components, manufactures spare parts, is responsible for engine final assembly and carries out maintenance work. Other services include providing technical and logistical support for MTU products and training military personnel and civilians employed by the armed forces. The company's customers also include the air forces of many different nations. As lead industrial partner to the German armed forces, MTU provides service support for virtually every type of aero engine in service with the airborne units. It is also the German partner in all major military engine programs at European level. Examples include the EJ200 Eurofighter engine, the RB199 for the Tornado, the TP400-D6 for the A400M military transporter, and the MTR390 engine, as well as the more powerful MTR390 Enhanced Version which powers the Tiger combat helicopter. In the U.S. military market – the largest in the world – MTU is a riskand-revenue-sharing partner in America's F414, F404 and F110 aircraft engine and GE38 helicopter engine programs.
The MRO business covers all of MTU's commercial maintenance activities; these are organized under the umbrella of MTU Maintenance. The MTU Maintenance companies operate facilities in all the major markets and are collectively the world's largest independent provider of commercial maintenance services. They repair and overhaul aircraft engines and industrial gas turbines, offering an extensive range of services and one-stop solutions. The most significant programs are the V2500 for the Airbus A320 family, the CF6 deployed in widebody jets such as the A330 and the Boeing 747, the CF34 business and regional jet engine, and the LM series of gas turbines. Customers include airlines and stationary gas turbine operators all over the world.
MTU Aero Engines Holding AG, Munich, is the parent company of the MTU group. Its functions are largely those of a holding company, with the main focus on corporate strategy, risk management and corporate finance. The holding company is also responsible for maintaining contact with the business environment, the capital markets and, most importantly, shareholders. MTU Aero Engines Holding AG, Munich, together with the subsidiaries, joint ventures and other investee entities has a worldwide presence in all important markets and regions. Details of shareholdings in group companies can be found in the notes to the consolidated financial statements (section 2, Consolidated companies) in the Annual Report 2009.
The MTU group's headquarters and its main manufacturing site are located in Munich. The global network of subsidiaries, maintenance activities and the group's research and development activities are controlled from there. The Munich plant develops, manufactures, tests and markets commercial and military engine components and modules, develops new manufacturing processes and repair techniques, and assembles and repairs military engines.
All the company's commercial MRO activities are pooled under MTU Maintenance. MTU Maintenance Hannover, based in Langenhagen, is the largest maintenance plant in the MTU network. It supports mid-sized and large commercial engines and provides services such as customer training and a 24-hour service. Small engines and industrial gas turbines are supported by MTU Maintenance Berlin-Brandenburg, located at Ludwigsfelde near Berlin, which also assembles the TP400-D6 production engines for the A400M military transporter.
Further information concerning the activities of the group's foreign subsidiaries is provided in the Annual Report 2009 (pages 32 and 33).
The legal corporate structure of MTU Aero Engines Holding AG, Munich, did not change during the first three months of 2010. MTU Aero Engines Holding AG, Munich, does not have any operating activities of its own. It serves as a management holding, managing the affairs of the MTU Group across functions. The parent company's revenues of € 2.9 million all relate to income generated from performing holding company functions. Administrative and organizational processes also remained unchanged. No changes were planned before the Quarterly Financial Report for the first quarter 2010 does to press.
From an organizational point of view, MTU Aero Engines Holding AG, Munich is divided into four decision-making units, corresponding to the portfolios of the Board of Management members.
Dr. Rainer Martens is board member responsible for Technology. The covers the areas Development, Technology, Production and Military Maintenance. Other areas falling under his remit are Production Development, Materials Management, Purchases and Logistics and Quality. The managing director of MTU Aero Engines Polska Sp. z o.o., Rzeszów, Poland also reports to him directly.
Dr. Stefan Weingartner is responsible for the company's commercial maintenance operations. The two maintenance sites of MTU (Vericor Power Systems and the Business Development MRO department) report to him directly.
For information relating to legal risks faced by the MTU Group, reference is made to the Group Management Report published in the Annual Report 2009 (section 6, Risk Report). The situation remains as described in that document: there are currently no significant legal risks.
There have been no significant changes in prices and conditions on the procurement and sales markets during the first three months of the financial year 2010.
MTU's business model is focused on the long term. The life-cycle of an engine – from the research phase through to spare parts business – generally covers more than 40 years. During the financial year 2008, MTU acquired a whole range of participations in new engine programs based on risk-and-revenue-sharing arrangements (RRSP). These programs have been continuously developed since 2009. For information on the new engine programs, reference is made to section 1.4.3, Technologies for engine products of the future, of the Group Management Report in the Annual Report 2009.
Technological changes within the aviation sector take place at an extremely rapid pace and require a continuous source of innovation. Research and development expenditure will remain at a high level during the financial years 2010 and 2011. Due to various new engine programs, expenditure on research and development during the first three months of the year increased to € 51.8 million. The research and development ratio -- measured as R&D expenditure divided by revenues -- increased by 0.8 percentage points to 8.1 % (January - March 2009: 7.3 %).
| Research and development expenses | ||||
|---|---|---|---|---|
| Jan. 1 to March 31, 2010 |
Jan. 1 to March 31, 2009 |
Change against previous year | ||
| in € million | in € million | in € million | in % | |
| Commercial Engine business (OEM) | 33.6 | 30.1 | 3.5 | 11.6 |
| Military Engine business (OEM) | 15.8 | 17.9 | -2.1 | -11.7 |
| 49.4 | 48.0 | 1.4 | 2.9 | |
| Commercial Maintenance business (MRO) | 2.4 | 2.4 | ||
| Research and development (before amounts capitalized) | 51.8 | 50.4 | 1.4 | 2.8 |
| R&D ratio (as % of revenues) | 8.1 | 7.3 | 0.8 |
The amounts invested are subdivided into company-funded and externally funded R&D expenditure. Company-funded expenditure is borne by the group whereas externally funded expenditure is paid for by customers. Company-funded expenditure is reported in the table below and in section 8 of the Selected Explanatory Notes to the Interim Consolidated Financial Statements as R&D expense. Externally funded R&D activities are accounted for as construction contract receivables or payables in accordance with IAS 11 due to the fact that the work is commissioned specifically by national and international consortia. Firstquarter R&D expenditure of € 51.8 million (first quarter 2009: € 50.4 million) included € 32.9 million (first quarter 2009: € 30.4 million) relating to company-funded expenditure. Of this amount, € 30.5 million (January - March 2009: € 28.0 million) related to Commercial and Military Engine business (OEM). A total of € 3.1 million (January - March 2009: € 1.7 million) relating to the GE38 and GEnx engines was recognized as capitalized developments costs.
The expense for Commercial Maintenance business during the three-month period was € 2.4 million (January - March 2009: € 2.4 million)
The following table includes the own-financed research and development expense reported in the income statement (see section 8 of the Selected Explanatory Notes).
| Jan. 1 to March 31, 2010 |
Jan. 1 to March 31, 2009 |
Change against previous year | ||
|---|---|---|---|---|
| in € million | in € million | in € million | in % | |
| Commercial Engine business (OEM) | 28.1 | 25.8 | 2.3 | 8.9 |
| Military Engine business (OEM) | 2.4 | 2.2 | 0.2 | 9.1 |
| 30.5 | 28.0 | 2.5 | 8.9 | |
| Commercial Maintenance business (MRO) | 2.4 | 2.4 | ||
| Own financed R&D expenditure | 32.9 | 30.4 | 2.5 | 8.2 |
| Thereof: | ||||
| Capital expenditure on capitalisable assets | ||||
| Commercial Engine business (OEM) | -3.1 | -1.7 | -1.4 | -82.4 |
| Commercial Maintenance business (MRO) | -2.0 | -2.0 | ||
| Total capitalized | -5.1 | -1.7 | -3.4 | -200.0 |
| Research and development expenses | ||||
| per income statement | 27.8 | 28.7 | -0.9 | -3.1 |
| Jan. 1 to March 31, 2010 |
Jan. 1 to March 31, 2009 |
Change against previous year | ||
|---|---|---|---|---|
| in € million | in € million | in € million | in % | |
| Revenues | 640.2 | 693.1 | -52.9 | -7.6 |
| Cost of sales | -525.1 | -574.3 | 49.2 | 8.6 |
| Gross profit | 115.1 | 118.8 | -3.7 | -3.1 |
| Other expenses allocated to functions | -57.3 | -55.1 | -2.2 | -4.0 |
| Earnings before interest and taxes (EBIT) | 57.8 | 63.7 | -5.9 | -9.3 |
| Write-downs on assets resulting from PPA | 11.0 | 11.5 | -0.5 | -4.3 |
| Adjusted earnings before interest and taxes | ||||
| (EBIT adjusted) | 68.8 | 75.2 | -6.4 | -8.5 |
| Finance result | -9.3 | -20.7 | 11.4 | 55.1 |
| Earnings before taxes (EBT) | 48.5 | 43.0 | 5.5 | 12.8 |
| Income taxes | -15.9 | -12.0 | -3.9 | -32.5 |
| Earnings after taxes (EAT) | 32.6 | 31.0 | 1.6 | 5.2 |
| Jan. 1 to March 31, 2010 |
Jan. 1 to March 31, 2009 |
Change against previous year | |||
|---|---|---|---|---|---|
| in € million | in € million | in € million | in % | ||
| Earnings after taxes (EAT) | 32.6 | 31.0 | 1.6 | 5.2 | |
| Income and expenses recognized directly in equity | -12.7 | -17.2 | 4.5 | 26.2 | |
| Comprehensive income for the period | 19.9 | 13.8 | 6.1 | 44.2 |
MTU's order backlog consists of firm orders placed directly by customers which commit the group to delivering products or providing services. Orders for maintenance work to be performed under the contractual terms of long-term service agreements are not included in the order backlog for the commercial MRO business. In order to obtain a picture of the economic value of the total contracted order volume and the corresponding degree of capacity utilization, the figures for the contracted value of service agreements in the Commercial MRO business are disclosed separately in addition to the backlog for Commercial and Military Engine business (OEM) and the Commercial Maintenance business (MRO).
| March 31, 2010 in € million |
Dec. 31, 2009 in € million |
Change against previous year in € million |
in % | |
|---|---|---|---|---|
| Commercial Engine business | 2,863.1 | 2,542.2 | 320.9 | 12.6 |
| Military Engine business | 1,374.0 | 1,422.9 | -48.9 | -3.4 |
| Commercial and Military Engine business (OEM) | 4,237.1 | 3,965.1 | 272.0 | 6.9 |
| Order backlog Commercial Maintenance | 176.6 | 185.8 | -9.2 | -5.0 |
| Order value Commercial Maintenance | 4,850.0 | 4,692.2 | 157.8 | 3.4 |
| Commercial Maintenance business (MRO) | 5,026.6 | 4,878.0 | 148.6 | 3.0 |
| Total | 9,263.7 | 8,843.1 | 420.6 | 4.8 |
The group's order backlog including the value of MRO contracts (order volume) at March 31, 2010 totalled € 9,263.7 million (unconsolidated basis) and was therefore € 420.6 million (4.8 %) higher than at December 31, 2009.
The order backlog for Commercial Engine business increased by € 320.9 million compared to December 31, 2009, while the Military Engine business order book decreased by € 48.9 million during the same period. By contrast, the backlog including value of MRO contracts at March 31, 2010 was € 148.6 million higher than at December 31, 2009.
The order backlog at March 31, 2010 corresponds to a workload of approximately three years. Excluding the value of MRO contracts, the backlog corresponds to a workload of approximately one and a half years.
Revenues for the period from January 1 to March 31, 2010 fell by € 52.9 million (7.6 %) to € 640.2 million. While revenues from Commercial and Military Engine business (OEM) edged up by € 2.6 million (0.7 %) to € 401.4 million, revenues from Commercial Maintenance business (MRO) decreased by € 57.4 million (19.0 %) to € 245.0 million. Adjusted for the US dollar impact (i.e. using the same exchange rate as in the previous year), first-quarter group revenues would have decreased by € 20.9 million (3.0 %).
Commercial Engine business revenues were down by € 19.3 million. Revenues generated with spare parts business were almost unchanged while revenues from series production business fell by approximately € 14 million compared with the first quarter 2009.
Revenues from Military Engine business were € 21.9 million higher than one year earlier, mainly as a result of contract production for the EJ200.
Cost of sales for the first three months of 2010 decreased by € 49.2 million (8.6 %) to € 525.1 million, with cost of sales up by € 2.5 million (0.8 %) to € 314.8 million for Commercial and Military Engine business and down by € 54.4 million (20.0 %) to € 217.8 million for Commercial Maintenance business. As a result, the first-quarter gross profit decreased by € 3.7 million (3.1 %) to € 115.1 million.
Research and development expenditure before capitalization totalled € 32.9 million, corresponding to an increase of € 2.5 million (8.2 %) against the first quarter of the previous year. R&D expense related mainly to the GE 38 engine program with General Electric (for the heavy-lift CH-53K transport helicopter manufactured by Sikorsky), the GEnx engine program for the Boeing 787 and 747-8, the PW1524G engine program for Bombardier's C-Series and the PW1217G engine program used to power Mitsubishi Heavy Industries' new regional jet (MRJ).
Depreciation and amortization included in expense lines by function in the first three months of 2010 – including depreciation and amortization resulting from the purchase price allocation (PPA) – totalled € 31.4 million (January – March 2009: € 30.7 million).
The effects of the purchase price allocation resulting from the acquisition of the company (including any impairment losses subsequently recorded) are added back to earnings before interest and taxes (EBIT). This gives rise to adjusted earnings before interest and taxes (EBIT adjusted).
The EBIT adjusted for the first three months of 2010 fell by € 6.4 million (8.5 %) to € 68.8 million (January - March 2009: € 75.2 million), mainly due to the € 3.7 million drop in gross profit. The margin at an adjusted EBIT level was 10.7 % (January - March 2009: 10.8 %).
The financial result for the first quarter was net expense of € 9.3 million (first quarter 2009: net expense of € 20.7 million). The improvement was primarily due to the positive impact of the measurement of currency holdings at the period end and the fair value measurement of derivatives (reported within "Financial result on other items").
Despite the decrease in first-quarter earnings before interest and taxes (EBIT), the improvement in financial result meant that earnings before taxes (EBT) rose by € 5.5 million (12.8 %) to € 48.5 million (January – March 2009: € 43.0 million).
Earnings after taxes (EAT) for the period from January 1 to March 31, 2010 increased accordingly by € 1.6 million to € 32.6 million (January – March 2009: € 31.0 million).
In the consolidated statement of comprehensive income, the net profit (earnings after taxes) of € 32.6 million (January - March 2009: € 31.0 million) is reconciled to the comprehensive income for the period of € 19.9 million (January - March 2009: € 13.8 million). Income and expenses recognized directly in equity during the three-month period under report (net of deferred taxes) comprise a negative impact of € 21.8 million (January - March 2009: negative impact of € 15.5 million) from the fair value measurement of derivative financial instruments and a positive impact of € 9.1 million (January - March 2009: negative impact of € 1.7 million) relating to currency translation differences.
The principles and objectives of financial management, as described in the Annual Report 2009 (page 80 onwards), remain unchanged.
The main currency used to finance the MTU Group is the Euro. This relates principally to loans, a convertible bond issue, the availability of credit facilities (RCF 2009) and the issue of four promissory notes.
At March 31, 2010, the MTU Group has access to an overdraft facility of € 100.0 million with two banks. Of these credit facilities, € 29.3 million (December 31, 2009: € 27.7 million) were being utilized at March 31, 2010 for guarantees.
MTU reports free cash flow -- defined as the cash flow from operating activities less cash outflow for investments in intangible assets, property, plant and equipment and financial assets -- as a key performance indicator. Free cash flow does not include investments in financial assets classified to the category "Non-derivative available-for-sale financial assets". This indicator enables investors to assess MTU's ability to generate cash flows from operating activities. With the exception of available-for-sale financial assets, free cash flow is available to cover fixed and additional free cash outflows not included in the measurement of the indicator (such as for dividend payments, the servicing of liabilities or acquisitions).
Free cash flow, which remains one of the key performance indicators for MTU fell slightly by € 3.7 million to € 31.7 million for the quarter under report. MTU acquired non-derivative financial assets for € 73.0 million during the first quarter (January - March 2009: € 0.0 million) which have been classified as available-for-sale. These financial assets are not included in the calculation of free cash flow since they can be sold at any time and are held as a liquidity reserve.
| Jan. 1 to March 31, 2010 |
Jan. 1 to March 31, 2009 |
Change against previous year | ||
|---|---|---|---|---|
| in € million | in € million | in € million | in % | |
| Cash flow from operating activities | 51.2 | 59.8 | -8.6 | -14.4 |
| - Cash flow from investing activities |
-92.5 | -24.4 | -68.1 | -279.1 |
| + Cash flow from investments in financial assets |
73.0 | 73.0 | ||
| Free cash flow | 31.7 | 35.4 | -3.7 | -10.5 |
| - Cash flow from investments in financial assets |
-73.0 | -73.0 | ||
| Cash flow from financing activities | 1.9 | -11.4 | 13.3 | 116.7 |
| Exchange rate changes | 2.7 | -1.6 | 4.3 | 268.8 |
| Change in cash and cash equivalents | -36.7 | 22.4 | -59.1 | -263.8 |
| Cash and cash equivalents at January 1 | 120.8 | 69.9 | 50.9 | 72.8 |
| Cash and cash equivalents at March 31 | 84.1 | 92.3 | -8.2 | -8.9 |
The cash flow from operating activities for the first three months of 2010 decreased by € 8.6 million to € 51.2 million (January - March 2009: € 59.8 million). This reduction was attributable to the increased amount tied up in working capital, partially offset by lower disbursements for interest and taxes.
The cash outflow for investing activities for the first quarter was € 92.5 million compared with € 24.4 million in the previous year. Capital expenditure on property, plant and equipment decreased to € 14.7 million (January - March 2009: € 25.4 million). The cash outflow for intangible assets amounted to € 5.2 million (January - March 2009: € 2.0 million) and related mainly to capitalized development costs for the GE38 and GEnx programs and for maintenance techniques. Further information of the cash flow from investments in financial assets is provided in the section of free cash flow. Proceeds from the sale of property, plant and equipment during the first three months of 2010 totalled € 0.4 million (January - March 2009: € 3.0 million).
The cash inflow from financing activities during the period from January to March 2010 was € 1.9 million compared to a cash outflow of € 11.4 million one year earlier. The cash inflow in the first quarter related primarily to a cash deposit in conjunction with cash pooling arrangements with MTU Versicherungsvermittlungs- und Wirtschaftsdienst GmbH, Munich, Germany. The cash outflow in the previous year was mainly due to the partial repayment of the previous RCF credit.
The various cash flows resulted in a decrease in cash and cash equivalents of € 36.7 million (January - March 2009: increase of € 22.4 million), mainly reflecting the acquisition of financial assets. Further information is provided in the section on free cash flow.
Cash and cash equivalents comprise the following at March 31, 2010:
| Cash and cash equivalents | ||||
|---|---|---|---|---|
| in Mio. € | March 31, 2010 in € million |
Dec. 31, 2009 in € million |
Change against previous year in € million |
in % |
| Bank balances, cash at hand | 39.3 | 85.4 | -46.1 | -54.0 |
| Overnight and fixed term deposits | 44.8 | 35.4 | 9.4 | 26.6 |
| Total cash and cash equivalents | 84.1 | 120.8 | -36.7 | -30.4 |
Net financial debt is used as a key performance indicator by leading capital market analysts. It is seen as an important indicator for the sector. MTU defines net financial debt as gross financial liabilities less available cash funds. Cash funds comprise cash and cash equivalents, derivative financial assets and available-for-sale financial assets. Compared to December 31, 2009, net financial debt decreased by € 6.6 million (4.6 %) to € 135.8 million thanks to an overall € 33.9 million increase in cash funds and despite the fact that the fair value measurement of derivative financial liabilities and derivative financial assets had a combined negative impact of € 34.5 million.
| March 31, 2010 | Dec. 31, 2009 | Change against previous year | ||
|---|---|---|---|---|
| in Mio. € | in € million | in € million | in € million | in % |
| Convertible bond | 146.7 | 148.9 | -2.2 | -1.5 |
| Financial liabilities to banks | ||||
| Promissory notes | 66.4 | 65.4 | 1.0 | 1.5 |
| Other bank credits | 11.2 | 14.6 | -3.4 | -23.3 |
| Financial liabilities torelated parties *) | 4.0 | 4.0 | ||
| Finance lease liabilities | 25.8 | 25.8 | ||
| Loan from the Province of British Columbia to | ||||
| MTU Maintenance Canada | 14.2 | 12.9 | 1.3 | 10.1 |
| Negative fair values of derivative financial instruments | 38.8 | 12.2 | 26.6 | 218.0 |
| Gross financial liabilities | 307.1 | 279.8 | 27.3 | 9.8 |
| Less cash funds: | ||||
| Cash and cash equivalents | 84.1 | 120.8 | -36.7 | -30.4 |
| Derivative financial assets | 8.7 | 16.6 | -7.9 | -47.6 |
| Financial assets not measured at fair value through | ||||
| profit or loss | 78.5 | 78.5 | ||
| Net financial liabilities | 135.8 | 142.4 | -6.6 | -4.6 |
| Gearing (in %) | 18.1 | 19.5 | -1.4 |
*) MTU Versicherungsvermittlungs- und Wirtschaftsdienst GmbH, Munich, Germany, which is not consolidated on the grounds of immateriality.
Group total assets at March 31, 2010 increased by approximately 2 % compared to December 31, 2009.
Non-current assets decreased by € 6.7 million to € 1,838.2 million (December 31, 2009: € 1,844.9 million). Current assets went up by € 67.7 million to € 1,371.9 million, mainly reflecting a € 16.6 million increase in inventories (up to € 665.3 million) and a € 36.1 million increase in trade and contract production receivables (up in aggregate to € 525.7 million).
Cash and cash equivalents decreased during the first three months of 2010 by € 36.7 million to € 84.1 million mainly as a result of the purchase of financial assets.
| in Mio. € | March 31, 2010 in € million |
Dec. 31, 2009 in € million |
March 31, 2009 in € million |
Jan. 1, 2009 in Mio. € |
|---|---|---|---|---|
| Non-current assets | 1,838.2 | 1,844.9 | 1,811.0 | 1,821.6 |
| Current assets | 1,371.9 | 1,304.2 | 1,386.0 | 1,374.5 |
| Total assets | 3,210.1 | 3,149.1 | 3,197.0 | 3,196.1 |
| Equity | 750.8 | 730.7 | 631.3 | 617.4 |
| Non-current liabilities | 1,093.1 | 1,088.7 | 1,037.6 | 1,052.3 |
| Current liabilities | 1,366.2 | 1,329.7 | 1,528.1 | 1,526.4 |
| Total equity and liabilities | 3,210.1 | 3,149.1 | 3,197.0 | 3,196.1 |
Group equity rose by € 20.1 million to stand at € 750.8 at March 31, 2010 (December 2009: € 730.7 million). Equity was increased by earnings after taxes (EAT) amounting to € 32.6 million (January – March 2009: € 31.0 million) and a net positive currency translation impact of € 9.1 million (January – March 2009: net negative currency translation impact of € 1.7 million). By contrast, income and expenses recognized directly in equity resulting from the fair value measurement of derivative financial instruments (net of deferred taxes) decreased equity by € 21.8 million (January – March 2009: € 15.5 million).
The equity ratio edged up by 0.2 percentage points to 23.4 %.
Pension provisions increased by € 2.1 million in line with schedule. The increase in non-current provisions was mainly attributable to changes in contingent liabilities relating to business combinations. Within current other provisions, the main increases compared to December 31, 2009 related to personnel-related obligations in connection with employee bonuses for the financial year 2009 and to retrospective costs.
Income tax liabilities take account of advance payments made during the period.
Financial liabilities increased overall by € 27.3 million compared to December 31, 2009, mainly as a result of fair market measurement gains of € 26.6 million on derivative financial instruments (see section 28 of the Selected Explanatory Notes).
Trade payables stood at € 320.6 million at March 31, 2010, marginally lower than at the end of the previous financial year.
Contract production liabilities (net of contract receivables) decreased by € 28.5 million to € 578.5 million during the first quarter 2010.
Other liabilities increased by € 21.4 million to € 120.0 million, mainly reflecting higher obligations to employees (up by € 13.7 million).
The following table shows the changes in assets and liabilities during the period from December 31, 2009 to March 31, 2010, analyzed by current and non-current items:
| 120.0 (Statement of changes between March 31, 2010 and December 31, 2009) |
in € million | in € million |
|---|---|---|
| 100.0 Non-current assets |
2.7 | -6.7 84.1 |
| 1.9 Intangible assets |
-3.8 | |
| 80.0 Property, plant and equipment |
-2.0 | |
| Financial assets | -2.8 | |
| 60.0 Financial assets accounted for using the equity method |
0.0 | |
| Other assets 40.0 |
0.8 | |
| Deferred tax assets | 1.1 | |
| 20.0 Current assets |
67.7 | |
| Inventories | 16.6 | |
| 0.0 Trade receivables |
27.0 | |
| Contract production receivables Cash and cash Cash flow from Cash flow from Cash flow from |
9.1 Exchange-rate |
Cash and cash |
| Income tax assets equivalents at operating activities investing activities financing activities |
-1.2 fluctuations |
equivalents at |
| Financial assets Jan. 1, 2010 |
73.4 | March 31, 2010 |
| Other assets | -20.6 | |
| Cash and cash equivalents | -36.7 | |
| Prepayments | 0.1 | |
| Change in assets | 61.0 | |
| Equity | 20.1 | |
| Non-current liabilities | 4.4 | |
| Provisions | 9.6 | |
| Financial liabilities | 13.0 | |
| Other liabilities | 0.9 | |
| Deferred tax assets | -19.1 | |
| Current liabilities | 36.5 | |
| Provisions | 9.3 | |
| Income tax liabilities | 21.2 | |
| Financial liabilities | 14.3 | |
| Trade payables | -0.3 | |
| Contract production liabilities | -28.5 | |
| Other liabilities | 20.5 | |
| Change in equity and liabilities | 61.0 |
The Commercial and Military Engine business (OEM) operating segment covers the development, manufacture and assembly of commercial and military engines and components. This operating segment also performs repair and maintenance work on military engines. The Commercial Maintenance business (MRO) operating segment performs maintenance and repair work on aircraft engines and industrial gas turbines. Further information is provided in the section dealing with segment information.
| 2010 | 2009 | Change against previous year | ||
|---|---|---|---|---|
| in € million | in € million | in € million | in % | |
| Revenues | ||||
| Commercial Engine business | 265.3 | 284.6 | -19.3 | -6.8 |
| Military Engine business | 136.1 | 114.2 | 21.9 | 19.2 |
| Total Commercial and Military Engine business (OEM) | 401.4 | 398.8 | 2.6 | 0.7 |
| Commercial Maintenance business (MRO) | 245.0 | 302.4 | -57.4 | -19.0 |
| Other Group entities/Consolidation | -6.2 | -8.1 | 1.9 | 23.5 |
| Group | 640.2 | 693.1 | -52.9 | -7.6 |
| Order backlog and value of MRO contracts*) | ||||
| (previous year: December 31, 2009) | ||||
| Commercial and Military Engine business (OEM) | 4,237.1 | 3,965.1 | 272.0 | 6.9 |
| Commercial Maintenance business (MRO) | 5,026.6 | 4,878.0 | 148.6 | 3.0 |
| Group | 9,263.7 | 8,843.1 | 420.6 | 4.8 |
| Capital expenditure on intangible assets, property | ||||
| plant and equipment and financial assets **) | ||||
| Commercial and Military Engine business (OEM) | 14.4 | 20.0 | -5.6 | -28.0 |
| Commercial Maintenance business (MRO) | 5.5 | 7.4 | -1.9 | -25.7 |
| Group | 19.9 | 27.4 | -7.5 | -27.4 |
| Adjusted earnings before interest and taxes (EBIT adjusted) |
||||
| Commercial and Military Engine business (OEM) | 52.8 | 54.8 | -2.0 | -3.6 |
| Commercial Maintenance business (MRO) | 14.2 | 19.3 | -5.1 | -26.4 |
| Other Group entities/Consolidation | 1.8 | 1.1 | 0.7 | 63.6 |
| Group | 68.8 | 75.2 | -6.4 | -8.5 |
| Adjusted EBIT - margin (in %) ***) | ||||
| Commercial and Military Engine business (OEM) | 13.2 | 13.7 | -0.5 | |
| Commercial Maintenance business (MRO) | 5.8 | 6.4 | -0.6 | |
| Group | 10.7 | 10.8 | -0.1 | |
| Number of employees (quarterly average) | ||||
| Commercial and Military Engine business (OEM) | 4,867 | 4,957 | -90 | -1.8 |
| Commercial Maintenance business (MRO) | 2,814 | 2,631 | 183 | 7.0 |
| Group | 7,681 | 7,588 | 93 | 1.2 |
*) includes contractually committed order volume (see explanatory comments in section 3.2 of the Interim Group Management Report); before consolidation
**) excluding available-for-sale financial assets
***) Change in percentage points
Earnings performance for the period from January 1 to March 31, 2010
The Commercial and Military Engine business (OEM) segment generated revenues of € 401.4 million during the first three months of 2010, € 2.6 million (0.7 %) up on the previous year. Within those figures, revenues from Commercial Engine business decreased by € 19.3 million (6.8 %) to € 265.3 million, while revenues from Military Engine business, at € 136.1 million, were up on the previous year's level (January - March 2009: € 114.2 million). Adjusted for the US dollar impact, revenues would have increased by € 19.2 million (4.8 %) compared to the previous year.
Segment cost of sales includes material and personnel expenses, scheduled depreciation and amortization, the change in inventories of work in progress and expenses charged to MTU by consortium leaders in return for marketing new engines. At € 314.8 million, segment cost of sales for the first quarter 2010 was almost unchanged from the previous year (€ 312.3 million). Reflecting the fact that first-quarter revenues were hardly changed, the gross profit for the three-month period, at € 86.6 million, was also virtually identical. The first-quarter gross margin stood at 21.6 % compared with 21.7 % one year earlier.
With the gross profit almost unchanged and research and development expenses moderately increased, adjusted earnings before interest and taxes (EBIT adjusted) for the three-month period fell by € 2.0 million (3.6 %) to € 52.8 million. The adjusted EBIT margin dropped to 13.2 %.
Earnings performance for the three-month period to March 31, 2010
Revenues generated by the MRO segment in the period from January 1 to March 31, 2010 amounted to € 245.0 million, which was € 57.4 million (19.0 %) lower than in the corresponding period in 2009. Adjusted for the US dollar impact, revenues amounted to € 260.4 million. Using this figure, the decrease in revenues against the previous year would have been € 42.0 million (13.9 %).
First-quarter cost of sales decreased by € 54.4 million (20.0 %) to € 217.8 million. As a result of the decrease in revenues, the gross profit fell by € 3.0 million (9.9 %) to € 27.2 million, while the gross profit percentage improved from 10.0 % to 11.1 %.
In line with the lower gross profit, the segment's adjusted earnings before interest and taxes (EBIT adjusted) for the first three months of 2010 fell by € 5.1 million (26.4 %) to € 14.2 million. The adjusted EBIT margin for the Commercial Engine Maintenance segment for the first quarter 2010 was 5.8 % (January – March 2009: 6.4 %).
Capital expenditure during the first three months of 2010 totalled € 92.9 million (January-March 2009: € 27.4 million). This included € 14.4 million spent by the OEM segment (January - March 2009: € 20.0 million) and € 5.5 million spent by the MRO segment (January - March 2009: € 7.4 million).
| Capital expenditure by segment *) | |||||
|---|---|---|---|---|---|
| Jan. 1 to March 31, 2010 in € million |
Jan. 1 to March 31, 2009 in € million |
Change against previous year in € million |
in % | ||
| OEM segment | |||||
| Intangible assets | 3.2 | 2.0 | 1.2 | 60.0 | |
| Property, plant and equipment | 11.2 | 18.0 | -6.8 | -37.8 | |
| Total OEM segment | 14.4 | 20.0 | -5.6 | -28.0 | |
| MRO segment | |||||
| Intangible assets | 2.0 | 2.0 | |||
| Property, plant and equipment | 3.5 | 7.4 | -3.9 | -52.7 | |
| Total MRO segment | 5.5 | 7.4 | -1.9 | -25.7 | |
| Total Other group entities | 73.0 | 73.0 | |||
| Total | 92.9 | 27.4 | 65.5 | 239.1 |
*) excluding proceeds arising on the disposal of property, plant and equipment
The amount reported for Other Entities relates to investments in financial assets totalling € 73.0 million (January – March 2009: € 0.0 million). Further information is provided in section 3.3, Operating results, financial situation and net assets.
Capital expenditure on intangible assets and property, plant and equipment were as follows:
Capital expenditure on intangible assets in the first quarter 2010 totalling € 3.2 million (January - March 2009: € 2.0 million) includes capitalized development work of € 3.1 million (January - March 2009: € 1.7 million) relating to the GE38 und GEnx engine programs.
Capital expenditure on property, plant and equipment in the first three months of 2010 amounting to € 11.2 million (January - March 2009: € 18.0 million) related mainly to additions of plant, machinery, other operational and office equipment. Proceeds from the sale of items of property, plant and equipment in the first quarter 2010 totalled € 0.4 million (January - March 2009: € 3.0 million).
Capital expenditure for MRO business during the period from January 1 to March 31, 2010 included € 3.5 million spent on property, plant and equipment (January - March 2009: € 7.4 million). Investments in intangible assets totalling € 2.0 million related to specialized procedures to repair and maintain engines more economically (January - March 2009: € 0.0 million).
The increase in first-quarter expenditure for Other Group Entities related to investments in financial assets totalling € 73.0 million (January - March 2009: € 0.0 million). Further information is provided in section 3.3, Operating results, financial situation and net assets.
At March 31, 2010 the MTU Group had a workforce of 7,681 employees, including 305 trainees (December 31, 2009: 7,665 employees), an increase of 16 employees since the end of 2009. The workforce of the OEM segment was reduced by 18 employees despite the build-up of staff at MTU Aero Engines Polska, Poland. The workforce of the MRO segment also increased during the period.
At the end of March 2010, 6,839 employees (89.0 %) worked for group companies in Germany and 842 employees (11.0 %) for group companies outside Germany.
The personnel expense for the quarter totalled € 135.4 million (January - March 2009: € 115.5 million).
A new tariff agreement was agreed in Germany in the first quarter 2010, entailing a one-off payment of € 320 in 2010 and a 2.7 % increase in tariff remuneration with effect from April 2011.
For information regarding the Group's opportunities and risk situation, reference is made to the Annual Report 2009 (pages 109 to 125) and to the disclaimer at the end of this quarterly financial report.
MTU Group companies did not enter into any material contracts with members of the Board of Management, the Supervisory Board or with other key management personnel or with companies in whose management or supervisory boards those persons are represented. The same applies to close members of the families of those persons.
Transactions with related entities are conducted on an arm's length basis. Transactions with related parties are disclosed in section 32 of the Selected Explanatory Notes.
In its rating published on April 19, 2010 Fitch gave MTU's a corporate creditworthiness rating of "BBB-" (investment grade). The ratings issued by S&P ("BB+" with stable outlook) and Moody's ("Ba1" with positive outlook) remained unchanged.
No other significant events occured after the end of the interim reporting period (March 31, 2010) and prior to the date of authorization for issue of the quarterly financial report on April 19, 2010.
| Jan.1 - March 31, 2010 Jan.1 - March 31, 2009 |
Change against previous year |
||||||
|---|---|---|---|---|---|---|---|
| (Note) | in € million | in % | in € million | in % | in € million | in % | |
| Revenues | (6) | 640.2 | 100.0 | 693.1 | 100.0 | -52.9 | -7.6 |
| Cost of sales | (7) | -525.1 | -82.0 | -574.3 | -82.9 | 49.2 | 8.6 |
| Gross profit | 115.1 | 18.0 | 118.8 | 17.1 | -3.7 | -3.1 | |
| Research and development expenses | (8) | -27.8 | -4.4 | -28.7 | -4.1 | 0.9 | 3.1 |
| Selling expenses | (9) | -17.1 | -2.7 | -17.0 | -2.5 | -0.1 | -0.6 |
| General administrative expenses | (10) | -12.8 | -2.0 | -12.6 | -1.8 | -0.2 | -1.6 |
| Other operating income and expenses | 0.4 | 0.1 | 3.2 | 0.5 | -2.8 | -87.5 | |
| Earnings before interest and taxes (EBIT) | 57.8 | 9.0 | 63.7 | 9.2 | -5.9 | -9.3 | |
| Interest income | 2.8 | 0.4 | 0.3 | 2.5 | 833.3 | ||
| Interest expenses | -4.0 | -0.6 | -3.5 | -0.5 | -0.5 | -14.3 | |
| Interest result | (12) | -1.2 | -0.2 | -3.2 | -0.5 | 2.0 | 62.5 |
| Result from equity accounted investments | (13) | 0.4 | 0.1 | -0.4 | -100.0 | ||
| Financial result on other items | (14) | -8.1 | -1.2 | -17.9 | -2.6 | 9.8 | 54.7 |
| Financial result | -9.3 | -1.4 | -20.7 | -3.0 | 11.4 | 55.1 | |
| Earnings before taxes (EBT) | 48.5 | 7.6 | 43.0 | 6.2 | 5.5 | 12.8 | |
| Income taxes | (15) | -15.9 | -2.5 | -12.0 | -1.7 | -3.9 | -32.5 |
| Earnings after taxes (EAT) | 32.6 | 5.1 | 31.0 | 4.5 | 1.6 | 5.2 | |
| Earnings per share in € | |||||||
| Undiluted (EPS) | (16) | 0.67 | 0.64 | 0.03 | |||
| Diluted (DEPS) | (16) | 0.65 | 0.62 | 0.03 |
| Jan.1 - March 31, 2010 Jan.1 - March 31, 2009 |
Change against previous year |
||||||
|---|---|---|---|---|---|---|---|
| (Note) | in € million | in % | in € million | in % | in € million | in % | |
| Earnings after taxes (EAT) | 32.6 | 5.1 | 31.0 | 4.5 | 1.6 | 5.2 | |
| Translation differences | 9.1 | 1.4 | -1.7 | -0.3 | 10.8 | 635.3 | |
| Changes in the fair value measurement of | |||||||
| derivative financial instruments | -32.4 | -5.1 | -23.0 | -3.3 | -9.4 | -40.9 | |
| Deferred taxes recognized directly in equity | 10.6 | 1.7 | 7.5 | 1.1 | 3.1 | 41.3 | |
| Income and expenses recognized | |||||||
| directly in equity | -12.7 | -2.0 | -17.2 | -2.5 | 4.5 | 26.2 | |
| Comprehensive income for the period | (17) | 19.9 | 3.1 | 13.8 | 2.0 | 6.1 | 44.2 |
| Assets | |||||
|---|---|---|---|---|---|
| (Note) | March 31, 2010 in € million |
Dec. 31, 2009 in € million |
March 31, 2009 *) in € million |
Jan. 1, 2009 in € million |
|
| Non-current assets | |||||
| Intangible assets | (18) | 1,244.4 | 1,248.2 | 1,267.0 | 1,274.9 |
| Property, plant and equipment | (19) | 554.7 | 556.7 | 527.9 | 525.1 |
| Financial assets | (20) | 12.1 | 14.9 | 7.3 | 12.6 |
| Financial assets accounted for using the equity method | (20) | 2.1 | 2.1 | 4.0 | 3.6 |
| Other assets | (24) | 6.9 | 6.1 | 4.1 | 4.0 |
| Deferred tax assets | 18.0 | 16.9 | 0.7 | 1.4 | |
| Total non-current assets | 1,838.2 | 1,844.9 | 1,811.0 | 1,821.6 | |
| Current assets | |||||
| Inventories | (21) | 665.3 | 648.7 | 694.6 | 661.4 |
| Trade receivables | (22) | 418.2 | 391.2 | 387.0 | 460.4 |
| Contract production receivables | (23) | 107.5 | 98.4 | 191.1 | 138.9 |
| Deferred tax assets | 1.2 | 1.0 | |||
| Financial assets | (20) | 82.9 | 9.5 | 2.1 | 4.0 |
| Other assets | (24) | 6.6 | 27.2 | 14.9 | 35.6 |
| Cash and cash equivalents | (25) | 84.1 | 120.8 | 92.3 | 69.9 |
| Prepayments | 7.3 | 7.2 | 4.0 | 3.3 | |
| Total current assets | 1,371.9 | 1,304.2 | 1,386.0 | 1,374.5 | |
| Total assets | 3,210.1 | 3,149.1 | 3,197.0 | 3,196.1 |
*) Disclosure for informational purposes only
| Equity and Liabilities | |||||
|---|---|---|---|---|---|
| (Note) | March 31, 2010 |
Dec. 31, 2009 |
March 31, 2009 *) |
Jan. 1, 2009 |
|
| in € million | in € million | in € million | in € million | ||
| Equity | (26) | ||||
| Subscribed capital | 52.0 | 52.0 | 52.0 | 52.0 | |
| Capital reserves | 353.8 | 353.6 | 354.6 | 354.5 | |
| Revenue reserves | 453.5 | 420.9 | 356.3 | 325.3 | |
| Treasury shares | -93.4 | -93.4 | -100.1 | -100.1 | |
| Other comprehensive income | -15.1 | -2.4 | -31.5 | -14.3 | |
| Total equity and liabilities | 750.8 | 730.7 | 631.3 | 617.4 | |
| Non-current liabilities | |||||
| Pension provisions | 392.0 | 389.9 | 374.7 | 371.7 | |
| Other provisions | (27) | 166.6 | 159.1 | 224.0 | 224.0 |
| Financial liabilities | (28) | 251.8 | 238.8 | 196.0 | 200.4 |
| Other liabilities | (30) | 34.9 | 34.0 | 30.0 | 28.6 |
| Deferred tax liabilities | 247.8 | 266.9 | 212.9 | 227.6 | |
| Total non-current liabilities | 1,093.1 | 1,088.7 | 1,037.6 | 1,052.3 | |
| Current liabilities | |||||
| Pension provisions | 21.7 | 21.7 | 18.5 | 18.5 | |
| Income tax liabilities | 33.7 | 12.5 | 29.0 | 23.0 | |
| Other provisions | (27) | 271.3 | 262.0 | 265.5 | 255.4 |
| Financial liabilities | (28) | 55.3 | 41.0 | 147.8 | 136.0 |
| Trade payables | 320.6 | 320.9 | 463.7 | 495.7 | |
| Contract production liabilities | (29) | 578.5 | 607.0 | 532.0 | 520.6 |
| Other liabilities | (30) | 85.1 | 64.6 | 71.6 | 77.2 |
| Total current liabilities | 1,366.2 | 1,329.7 | 1,528.1 | 1,526.4 | |
| Total equity and liabilities | 3,210.1 | 3,149.1 | 3,197.0 | 3,196.1 | |
*) Disclosure for informational purposes only
| Consolidated Statement of Changes in Equity | ||||||
|---|---|---|---|---|---|---|
| Sub scribed capital |
Capital reserves |
Revenue reserves |
Treasury shares |
Other comprehen sive income |
Group equity |
|
| in € million | ||||||
| Balance at January 1, 2009 | 52.0 | 354.5 | 325.3 | -100.1 | -14.3 | 617.4 |
| Changes in the fair value measurement of derivative | ||||||
| financial instruments | -15.5 | -15.5 | ||||
| Translation differences | -1.7 | -1.7 | ||||
| = Income and expenses recognized directly in equity |
-17.2 | -17.2 | ||||
| Earnings after taxes (EAT) | 31.0 | 31.0 | ||||
| = Comprehensive income for the period |
31.0 | -17.2 | 13.8 | |||
| Matching Stock Program (MSP) | 0.1 | 0.1 | ||||
| Balance at March 31, 2009 | 52.0 | 354.6 | 356.3 | -100.1 | -31.5 | 631.3 |
| Balance at January 1, 2010 | 52.0 | 353.6 | 420.9 | -93.4 | -2.4 | 730.7 |
| Changes in the fair value measurement of derivative | ||||||
| financial instruments | -21.8 | -21.8 | ||||
| Translation differences | 9.1 | 9.1 | ||||
| = Income and expenses recognized directly in equity |
-12.7 | -12.7 | ||||
| Earnings after taxes (EAT) | 32.6 | 32.6 | ||||
| = Comprehensive income for the period |
32.6 | -12.7 | 19.9 | |||
| Matching Stock Program (MSP) | 0.2 | 0.2 | ||||
| Balance at March 31, 2010 | 52.0 | 353.8 | 453.5 | -93.4 | -15.1 | 750.8 |
Reference is made to the disclosures on equity components provided in section 26 of the Selected Explanatory Notes.
| Consolidated Statement of Cash Flows | |
|---|---|
| -- | -------------------------------------- |
| Jan. 1 to March 31, 2010 |
Jan. 1 to March 31, 2009 |
|
|---|---|---|
| in € million | in € million | |
| Earnings after taxes (EAT) | 32.6 | 31.0 |
| Amortization of and impairment losses on intangible assets and property, plant and equipment | 31.4 | 30.7 |
| Profit/loss of companies accounted for using the equity method | -0.4 | |
| Gains/losses on the disposal of property, plant and equipment and intangible assets | 0.1 | -1.3 |
| Change in pension provisions | 2.1 | 3.0 |
| Change in other provisions | 16.8 | 10.2 |
| Other non-cash items | 1.0 | 5.4 |
| Movements in working capital | ||
| Changes in inventories | -16.6 | -33.2 |
| Changes in trade receivables | -27.0 | 73.4 |
| Changes in contract production receivables and payables | -37.6 | -40.8 |
| Changes in other assets | 14.7 | 20.9 |
| Changes in trade payables | -0.3 | -32.0 |
| Changes in other liabilities | 21.1 | -4.2 |
| Net interest result | 1.2 | 3.2 |
| Interest paid | -5.2 | -5.8 |
| Interest received | 2.6 | 0.3 |
| Income taxes | 15.9 | 12.0 |
| Income taxes paid and received | -1.6 | -12.6 |
| Cash flow from operating activities | 51.2 | 59.8 |
| Payments for investments in | ||
| Intangible assets | -5.2 | -2.0 |
| Property, plant and equipment | -14.7 | -25.4 |
| Financial assets | -73.0 | |
| Proceeds from disposals of | ||
| Property, plant and equipment | 0.4 | 3.0 |
| Cash flow from investing activities | -92.5 | -24.4 |
| Increase/decrease in other financial liabilities | 1.9 | -11.4 |
| Cash flow from financing activities | 1.9 | -11.4 |
| Effect of changes in exchanges rates on cash funds | 2.7 | -1.6 |
| Other changes in funds | 2.7 | -1.6 |
| Change in cash and cash equivalents | -36.7 | 22.4 |
| Cash and cash equivalents at January 1 | 120.8 | 69.9 |
| Cash and cash equivalents at March 31 | 84.1 | 92.3 |
The activities of the MTU Group's operating segments as well as changes in the presentation of segment information are described in section 1 of the interim group management report and section 4 of the Selected Explanatory Notes of the Quarterly Financial Report for the period ended March 31, 2010. Reference is also made to the Annual Report of MTU Aero Engines Holding AG for the year ended December 31, 2009.
Segment information for the period from January 1 to March 31, 2010 was as follows:
| Commercial and Military engine business (OEM) Jan.1 to |
Commercial Maintenance business (MRO) Jan.1 to |
Other Group Entities Jan.1 to |
Consolidation/ reconciliation Jan.1 to |
Group Jan.1 to |
|
|---|---|---|---|---|---|
| in € million | March 31, 2010 | March 31, 2010 | March 31, 2010 | March 31, 2010 | March 31, 2010 |
| External revenues | 396.3 | 243.9 | 640.2 | ||
| Inter-segment revenues | 5.1 | 1.1 | 2.9 | -9.1 | |
| Total revenues | 401.4 | 245.0 | 2.9 | -9.1 | 640.2 |
| Gross profit | 86.6 | 27.2 | 2.9 | -1.6 | 115.1 |
| Earnings before interest | |||||
| and taxes (EBIT) | 42.9 | 13.1 | 0.7 | 1.1 | 57.8 |
| Amortization/depreciation resulting | |||||
| from purchase price allocation | 9.9 | 1.1 | 11.0 | ||
| Adjusted earnings before interest | |||||
| and taxes (EBIT adjusted) | 52.8 | 14.2 | 0.7 | 1.1 | 68.8 |
| Result from equity accounted | |||||
| investments | |||||
| Assets (March 31, 2010) | 2,824.1 | 816.4 | 833.8 | -1,264.2 | 3,210.1 |
| Liabilities (March 31, 2010) | 2,011.9 | 389.9 | 259.2 | -201.7 | 2,459.3 |
| Capital expenditure in: | |||||
| Intangible assets | 3.2 | 2.0 | 5.2 | ||
| Property, plant and equipment | 11.2 | 3.5 | 14.7 | ||
| Total capital expenditure on intangible | |||||
| assets and property, plant and equipment | 14.4 | 5.5 | 19.9 | ||
| Key segment data: | |||||
| EBIT in % | 10.7 | 5.3 | 24.1 | 9.0 | |
| EBIT adjusted in % | 13.2 | 5.8 | 24.1 | 10.7 |
Segment information for the period from January 1 to March 31, 2009 was as follows:
| Segment Information Jan. 1 to March 31, 2009 | |||
|---|---|---|---|
| ---------------------------------------------- | -- | -- | -- |
| in € million | Commercial and Military engine business (OEM) Jan.1 to March 31, 2009 |
Commercial Maintenance business (MRO) Jan.1 to March 31, 2009 |
Other Group Entities Jan.1 to March 31, 2009 |
Consolidation/ reconciliation Jan.1 to March 31, 2009 |
Group Jan.1 to March 31, 2009 |
|---|---|---|---|---|---|
| External revenues | 392.8 | 300.3 | 693.1 | ||
| Inter-segment revenues | 6.0 | 2.1 | 1.9 | -10.0 | |
| Total revenues | 398.8 | 302.4 | 1.9 | -10.0 | 693.1 |
| Gross profit | 86.5 | 30.2 | 1.9 | 0.2 | 118.8 |
| Earnings before interest and taxes (EBIT) |
44.5 | 18.1 | -0.4 | 1.5 | 63.7 |
| Amortization/depreciation resulting | |||||
| from purchase price allocation | 10.3 | 1.2 | 11.5 | ||
| Adjusted earnings before interest | |||||
| and taxes (adjusted EBIT) | 54.8 | 19.3 | -0.4 | 1.5 | 75.2 |
| Result from equity | |||||
| accounted investments | |||||
| Assets (Dec. 31, 2009) | 2,788.2 | 808.6 | 816.2 | -1,263.9 | 3,149.1 |
| Liabilities (Dec. 31, 2009) | 1,977.7 | 399.6 | 241.9 | -200.8 | 2,418.4 |
| Capital expenditure in: | |||||
| Intangible assets | 2.0 | 2.0 | |||
| Property, plant and equipment | 18.0 | 7.4 | 25.4 | ||
| Total capital expenditure on intangible | |||||
| assets and property, plant and equipment | 20.0 | 7.4 | 27.4 | ||
| Key segment data: | |||||
| EBIT in % | 11.2 | 6.0 | -21.1 | 9.2 | |
| EBIT adjusted in % | 13.7 | 6.4 | -21.1 | 10.8 |
The following table reconciles group segment revenues to group revenues, segment result (EBIT) to group earnings before tax (EBT) and segment assets to group assets:
| Jan. 1 to | Jan. 1 to | |
|---|---|---|
| in € million | March 31, 2010 March 31, 2009 | |
| Total revenues | ||
| Revenues of reportable segments | 649.3 | 703.1 |
| Consolidation | -9.1 | -10.0 |
| Group revenues | 640.2 | 693.1 |
| Adjusted earnings before interest and taxes (EBIT adjusted) | ||
| Adjusted EBIT of reportable segments | 67.7 | 73.7 |
| Amortization/depreciation resulting from purchase price allocation | -11.0 | -11.5 |
| Consolidation | 1.1 | 1.5 |
| Earnings before interest and taxes (EBIT) | 57.8 | 63.7 |
| Interest income | 2.8 | 0.3 |
| Interest expense | -4.0 | -3.5 |
| Result from equity accounted investments | 0.4 | |
| Other financial result | -8.1 | -17.9 |
| Earnings before taxes (EBT) | 48.5 | 43.0 |
| Reconciliation to MTU Consolidated Financial Statements | ||
|---|---|---|
| in € million | March 31, 2010 | Dec. 31, 2009 |
| Assets | ||
| Assets of reportable segments | 4,474.3 | 4,413.0 |
| Consolidation | -1,264.2 | -1,263.9 |
| Group assets | 3,210.1 | 3,149.1 |
| Liabilities | ||
| Liabilities of reportable segments | 2,661.0 | 2,619.2 |
| Consolidation | -201.7 | -200.8 |
| Group liabilities | 2,459.3 | 2,418.4 |
The following table shows figures for the group by geographical region:
| in € million | Revenues by seat of customer Jan.1 -March 31, 2010 |
Capital expenditure on intangible assets and property, plant and equipment Jan.1 -March 31, 2010 |
Non-current assets March 31, 2010 |
|---|---|---|---|
| Germany | 144.2 | 17.1 | 1,717.1 |
| Europe | 73.2 | 1.8 | 57.0 |
| North America | 332.0 | 0.3 | 27.1 |
| South America | 34.2 | ||
| Africa | 1.8 | ||
| Asia | 49.7 | 0.7 | 37.0 |
| Australia/Oceania | 5.1 | ||
| 640.2 | 19.9 | 1,838.2 |
| Segment Information by Geographical Region 2009 | |||
|---|---|---|---|
| Revenues by seat of customer |
Capital expenditure on intangible assets and property, plant and equipment |
Non-current assets |
|
| in € million | Jan.1 -March 31, 2009 | Jan.1 -March 31, 2009 | Dec. 31, 2009 |
| Germany | 111.3 | 20.2 | 1,732.5 |
| Europe | 82.6 | 6.5 | 53.0 |
| North America | 375.3 | 0.5 | 25.1 |
| South America | 25.6 | ||
| Africa | 0.7 | ||
| Asia | 86.7 | 0.2 | 34.3 |
| Australia/Oceania | 10.9 | ||
| 693.1 | 27.4 | 1,844.9 |
Non-current assets comprise intangible assets, property, plant and equipment, non-current financial assets, non-current other assets and non-current deferred tax assets.
MTU Aero Engines Holding AG, with its group companies ("MTU" or "Group") is one of the world's leading manufacturers of engine modules and components and is the world's leading independent provider of commercial engine MRO services.
The business activities of the Group encompass the entire life-cycle of an engine program, i.e. from development, construction, testing and production of new commercial and military engines and spare parts, through to maintenance, repair and overhaul of commercial and military engines. MTU's activities focus on two segments: "Commercial and Military Engine business (OEM)" and "Commercial Maintenance business (MRO)".
MTU's Commercial Engine business covers the development and production of modules, components and spare parts for commercial engine programs, including final assembly. MTU's Military Engine business focuses on the development and production of modules and components for engines, production of spare parts and final assembly as well as maintenance services for these engines. Commercial Maintenance business covers activities in the area of maintenance and logistical support for commercial engines.
MTU Aero Engines Holding AG has its headquarters at Dachauer Str. 665, 80995 Munich, Germany, and is registered under HRB 157 206 in the Commercial Registry at the District Court of Munich.
The Condensed Interim Consolidated Financial Statements were authorized for publication by the Board of Management of MTU Aero Engines Holding AG on April 19, 2010.
In compliance with the provisions of § 37x (3) of the German Securities Trading Act (WpHG) in conjunction with § 37w (2) WpHG, MTU's quarterly financial report comprises condensed interim consolidated financial statements and an interim group management report. The condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) relevant for interim financial reporting, as endorsed by the European Union (EU). The interim group management report has been drawn up in compliance with the applicable provisions of the WpHG.
The condensed interim consolidated financial statements as at March 31, 2010 have been drawn up in compliance with IAS 34. As permitted by IAS 34, MTU has elected to provide condensed information in its interim consolidated financial statements compared with the consolidated financial statements as at December 31, 2009. With the exception of the changes described in section 4 of the Selected Explanatory Notes, the same accounting policies have been applied as in the consolidated financial statements for the financial year 2009.
All of the International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB), applicable at the end of the reporting period and applied by MTU in the condensed interim consolidated financial statements, have been endorsed by the European Commission for use in the EU. The condensed interim consolidated financial statements therefore also comply with IFRSs issued by the IASB.
From the perspective of management, the quarterly financial report contains all customary accounting adjustments necessary for a fair presentation of the operating results, financial situation and net assets of the group. Reference is made to the notes to the consolidated financial statements as at December 31, 2009 for further information regarding the basis of preparation and accounting policies used.
The condensed interim consolidated financial statements and interim group management report have neither been subject to a limited review by the group auditor nor audited in accordance with § 317 HGB.
Following the endorsement of amendments from the Annual Improvement Projects 2007 – 2009 on March 24, 2010, a second sentence was added to IAS 1.69 (d). As a result, the conversion attached to the MTU convertible bond no longer automatically results in the presentation of the debt capital component as a current liability. Since the bond does not fall due for repayment until February 1, 2012, the debt capital component is now reported as a non-current liability. In accordance with IAS 1.139D the amendment is applicable for periods beginning on or after January 1, 2010. Due to the lack of any specific transitional rules in IAS 1, this change in accounting policy has been amended in accordance with IAS 8.19 (b) with retrospective effect, including adjustments to the previous year's comparative figures. In accordance with IAS 34.5 (f), this retrospective application of a change in accounting policy requires the presentation of a statement of financial position as at the beginning of the earliest comparative period (January 1, 2009).
IFRS 8 "Operating Segments", which is mandatory for annual periods beginning on or after January 1, 2009, was published in November 2006. IFRS 8 replaces IAS 14 "Segment Reporting" and -- as part of the joint convergence project being conducted with the US Financial Accounting Standards Board (FASB) -- brings the Standard into line with the rules contained in US GAAP Statement of Financial Accounting Standards No. 131. IFRS 8, which is only mandatory for companies listed on a stock exchange, requires operating segments to be identified on the basis of internally used criteria (the "management approach"). MTU adopted IFRS 8 with effect from the beginning of 2009. This results in changes in the way that segment information is reported compared to the comparable quarter in the previous year. Further details are provided in the section on group segment information.
In the first quarter of 2010 the group invested a total of € 73.0 million (January - March 2009: € 0.0 million) in financial assets. These financial assets are not included in the calculation of free cash flow since they can be sold at any time and are held as a liquidity reserve.
There were no other changes in estimates or forecasts in the first quarter 2010 which have a significant impact on the interim reporting period. No incidences of erroneous assessments made in earlier periods were identified during the interim reporting period which would require to be disclosed.
As a globally operating company, MTU is exposed to divergent economic development, particularly in conjunction with risk-and-revenue-sharing arrangements. Sector-related seasonal fluctuations over the course of the year are normal and can result in fluctuations in the amount of revenues and earnings reported.
There were no changes in the group reporting entity in the reporting period as a result of acquisitions or disinvestments, changes in shareholdings or similar corporate transactions/events. The number of subsidiaries and investments in associated companies and joint ventures included in the condensed interim consolidated financial statements has therefore not changed by comparison to December 31, 2009.
At March 31, 2010, the MTU Group comprised 23 companies including MTU Aero Engines Holding AG, Munich, Germany. (See list of major shareholdings provided in the notes to the consolidated financial statements in the Annual Report 2009, section 45.1.2).
| Revenues | ||
|---|---|---|
| in € million | Jan. 1 to March 31, 2010 |
Jan. 1 to March 31, 2009 |
| Commercial Engine business | 265.3 | 284.6 |
| Military Engine business | 136.1 | 114.2 |
| Personnel expenses Commercial and Military Engine business (OEM) |
401.4 | 398.8 |
| Commercial Maintenance (MRO) | 245.0 | 302.4 |
| Other group entities/consolidation | -6.2 | -8.1 |
| Total revenues | 640.2 | 693.1 |
| Cost of sales | ||
|---|---|---|
| in € million | Jan. 1 to March 31, 2010 |
Jan. 1 to March 31, 2009 |
| Cost of materials | -398.4 | -452.6 |
| Personnel expenses | -93.3 | -80.4 |
| Depreciation and amortization | -27.9 | -27.5 |
| Other cost of sales *) | -5.5 | -13.8 |
| Total Cost of sales | -525.1 | -574.3 |
*) relates mainly to change in inventories of work in progress and exchange rate factors
| Research and development expenses | ||
|---|---|---|
| in € million | Jan. 1 to March 31, 2010 |
Jan. 1 to March 31, 2009 |
| Cost of materials | -10.6 | -12.9 |
| Personnel expenses | -20.2 | -15.7 |
| Depreciation and amortization | -2.1 | -1.8 |
| Research and development expenses | -32.9 | -30.4 |
| Thereof capitalized: | ||
| development costs (OEM) | 3.1 | 1.7 |
| development costs (MRO) | 2.0 | |
| Capitalized development costs | 5.1 | 1.7 |
| Research and development expenditure recognized as expense | -27.8 | -28.7 |
| Selling expenses | ||
|---|---|---|
| in € million | Jan. 1 to March 31, 2010 |
Jan. 1 to March 31, 2009 |
| Cost of materials | -2.3 | -2.3 |
| Personnel expenses | -12.2 | -11.3 |
| Depreciation and amortization | -0.5 | -0.8 |
| Other selling expenses | -2.1 | -2.6 |
| Total Selling expenses | -17.1 | -17.0 |
Selling expenses mainly comprise expenses for marketing, advertising and sales personnel, valuation allowances and write-downs on trade receivables.
| General administrative expenses | ||
|---|---|---|
| in € million | Jan. 1 to March 31, 2010 |
Jan. 1 to March 31, 2009 |
| Cost of materials | -1.2 | -1.8 |
| Personnel expenses | -9.7 | -8.1 |
| Depreciation and amortization | -0.9 | -0.6 |
| Other administrative expenses | -1.0 | -2.1 |
| Total General administrative expenses | -12.8 | -12.6 |
General and administrative expenses comprise expenses for administration which are not attributable to development, production or sales functions.
| Interest income | ||
|---|---|---|
| in € million | Jan. 1 to | Jan. 1 to |
| March 31, 2010 | March 31, 2009 | |
| Interest income | 2.8 | 0.3 |
| Interest expenses | ||
| Bank interest | -1.2 | -0.8 |
| Bonds | -2.0 | -1.9 |
| Interest expense for finance leases | -0.4 | -0.5 |
| Other interest expenses | -0.4 | -0.3 |
| Interest expenses | -4.0 | -3.5 |
| Net interest expense | -1.2 | -3.2 |
Interest income for the first three months of 2010 increased by € 2.5 million to € 2.8 million. Interest expenses increased by € 0.5 million to € 4.0 million. As a result, the interest result improved by € 2.0 million to a net interest expense of € 1.2 million.
| Result from equity accounted investments | ||
|---|---|---|
| in € million | Jan. 1 to March 31, 2010 |
Jan. 1 to March 31, 2009 |
| Result from equity accounted investments | 0.0 | 0.4 |
| Result from equity accounted investments | 0.0 | 0.4 |
The result from equity accounted investments includes the change in value of the joint arrangement Pratt & Whitney Canada Customer Service Centre Europe GmbH, Ludwigsfelde, Germany.
| Financial result on other items | ||
|---|---|---|
| in € million | Jan. 1 to March 31, 2010 |
Jan. 1 to March 31, 2009 |
| Effects of changes of foreign exchange rates | ||
| Exchange rate gains/losses on currency holdings | 5.9 | -0.1 |
| Exchange rate gains/losses on financing transactions | 0.1 | |
| Exchange rate gains/losses on finance leases | -0.3 | -0.6 |
| Fair value gains/losses on derivatives | ||
| Gains/losses on currency derivatives and interest rate derivatives | -6.0 | -8.3 |
| Gains/losses on commodity contracts | 3.6 | -2.4 |
| Interest portion included in measurement of assets and liabilities | ||
| Pension provision | -5.8 | -6.3 |
| Contingent liabilities | -3.3 | |
| Receivables, other provisions, plan assets, liabilities and advance payments received | -2.5 | -0.4 |
| Result from other financial instruments | 0.3 | 0.1 |
| Other financial result | -8.1 | -17.9 |
The improvement in the first-quarter other financial result was mainly attributable to the positive effect of currency translation and the fair value measurement of derivatives. This was partly offset by the interest portion relating to the measurement of assets and liabilities.
Income tax expense comprise the following:
| Income taxes | ||
|---|---|---|
| in € million | Jan. 1 to | Jan. 1 to |
| March 31, 2010 | March 31, 2009 | |
| Current income tax expense/income | -24.3 | -18.5 |
| Deferred tax income/expense | 8.4 | 6.5 |
| Total income taxes | -15.9 | -12.0 |
Potential ordinary shares that can be issued in conjunction with the convertible bond (issued on February 1, 2007) and the Matching Stock Program (MSP) set up on June 6, 2005 for the fourth and fifth tranches had a diluting effect on earnings per share for the period from January 1 to March 31, 2010. The Phantom Stocks relating to the third and fourth tranches which were taken into in the measurement of diluted earnings per share in the previous year did not have any diluting effect, since they were "not in the money". For the purposes of determining diluted earnings per share, the maximum number of shares that could be exercised in conjunction with conversion rights is added to the weighted average number of ordinary shares in circulation. All shares issued during the period under report are included on a weighted basis. In parallel, group earnings are adjusted by the amount of post-tax interest expense relating to the convertible bond.
The following tables show earnings per share as well as the dilutive impact of shares which could be issued in conjunction with the convertible bond and the Matching Stock Program.
Undiluted and diluted earnings per share for the three-month periods ended March 31, 2010 and 2009 were as follows:
| Undiluted and diluted earnings per share | |||||||
|---|---|---|---|---|---|---|---|
| Jan. 1 to March 31, 2010 |
Jan. 1 to March 31, 2010 |
||||||
| Undiluted | Financial instruments | Diluted | |||||
| earnings per share | reconciliation | earnings per share | |||||
| Interest expense |
Current and |
Matching Stock |
|||||
| convertible bond/shares |
deferred taxes |
Program/ shares |
|||||
| Earnings after taxes (EAT) | in € million | 32.6 | 2.0 | -0.7 | 33.9 | ||
| Weighted average number | |||||||
| of outstanding shares | shares | 48,922,019 | 3,086,869 | 229,450 | 52,238,338 | ||
| Earnings per share | in € | 0.67 | 0.65 |
| Undiluted and diluted earnings per share | ||||||
|---|---|---|---|---|---|---|
| Jan. 1 to March 31, 2009 |
Jan. 1 to March 31, 2009 |
|||||
| Undiluted | Financial instruments | Diluted | ||||
| earnings per share | reconciliation | earnings per share | ||||
| Interest expense |
Current and |
Matching Stock |
||||
| convertible bond/shares |
deferred taxes |
Program/ shares |
||||
| Earnings after taxes (EAT) | in € million | 31.0 | 1.9 | -0.6 | 32.3 | |
| Weighted average number | ||||||
| of outstanding shares *) | shares | 48,770,945 | 3,086,869 | 51,857,814 | ||
| Earnings per share | in € | 0.64 | 0.62 |
*) The Matching Stock Program (MSP) does not have any dilutative effect.
In the consolidated statement of comprehensive income, earnings after taxes (EAT) of € 32.6 million (January - March 2009: € 31.0 million) are reconciled to the comprehensive income for the period of € 19.9 million (January - March 2009: € 13.8 million). The improvement in comprehensive income for the period was attributable to net translation gains relating to foreign group companies amounting to € 9.1 million (January - March 2009: net translation losses of € 1.7 million). Net fair value losses (after deferred taxes) on derivative financial instruments of € 21.8 million (January - March 2009: € 15.5 million) decreased comprehensive income for the period.
Intangible assets comprise program values and non-specific program technologies recognized in conjunction with the purchase price allocation, participations in development programs, technical software and purchased goodwill.
Expenditure of € 5.2 million (January - March 2009: € 2.0 million) was recognized as an asset for intangible assets during the first quarter. This including € 5.1 million of capitalized development costs (January - March 2009: € 1.7 million).
The amortization expense for the three-month period amounted to € 12.6 million (January - March 2009: € 12.1 million).
Capital expenditure for property, plant and equipment during the first three months of the year was € 14.7 million (January - March 2009: € 25.4 million). Additions to property, plant and equipment related mainly to technical equipment, plant and machinery and other operational and office equipment. The depreciation expense for the first three months amounted to € 18.8 million (January - March 2009: € 18.6 million).
Financial assets increased overall by € 70.6 million during the first three months of 2010 to € 97.1 million (December 31, 2009: € 26.5 million). This was due mainly to the purchase of financial assets. Further information is provided in section 4, Adjustments to the condensed interim consolidated financial statements.
Inventories comprise the following:
| Inventories | ||
|---|---|---|
| in € million | March 31, 2010 | Dec. 31, 2009 |
| Raw materials and supplies | 292.9 | 308.8 |
| Work in progress | 334.2 | 306.0 |
| Advance payments | 38.2 | 33.9 |
| Total Inventories | 665.3 | 648.7 |
Trade receivables comprise the following:
| Trade receivables | |||
|---|---|---|---|
| in € million | March 31, 2010 | Dec. 31, 2009 | |
| Third parties | 374.6 | 344.6 | |
| Associated companies | 36.8 | 41.4 | |
| Joint ventures | 6.8 | 5.2 | |
| Total Trade receivables | 418.2 | 391.2 | |
Contract production receivables comprise the following:
| Contract production receivables | |||
|---|---|---|---|
| in € million | March 31, 2010 | Dec. 31, 2009 | |
| Contract production receivables | 371.8 | 339.0 | |
| of which related to: | |||
| Advance payments from customers | -264.3 | -240.6 | |
| Net contract production receivables | 107.5 | 98.4 | |
Other assets comprise the following:
| Total | Non-current | Current | |||||
|---|---|---|---|---|---|---|---|
| in € million | March 31, 2010 Dec. 31, 2009 March 31, 2010 Dec. 31, 2009 March 31, 2010 Dec. 31, 2009 | ||||||
| Other taxes | 3.6 | 14.8 | 3.6 | 14.8 | |||
| Receivables from employees | 1.5 | 1.0 | 1.5 | 1.0 | |||
| Receivables from suppliers | 0.3 | 3.3 | 0.3 | 3.3 | |||
| Sundry other assets | 8.1 | 14.2 | 6.9 | 6.1 | 1.2 | 8.1 | |
| Total Other assets | 13.5 | 33.3 | 6.9 | 6.1 | 6.6 | 27.2 |
Other taxes relate primarily to sales tax receivables.
Cash and cash equivalents comprise the following:
| Cash and cash equivalents | ||
|---|---|---|
| in € million | March 31, 2010 Dec. 31, 2009 | |
| Bank balances, cash at hand | 39.3 | 85.4 |
| Overnight and fixed term deposits | 44.8 | 35.4 |
| Total Cash and cash equivalents | 84.1 | 120.8 |
Changes in equity are presented in the Consolidated Statement of Changes in Equity.
The Company's share capital is unchanged at € 52.0 million (December 31, 2009: € 52.0 million) and is divided into 52.0 million non-par-value shares (December 31, 2009: 52.0 million shares).
Capital reserves includes premiums arising on the issue of shares, the equity component (and proportionate transaction costs) of the convertible bond, the fair values recorded for the Matching Stock Program (MSP) and the expense incurred from transferring treasury shares to employees in conjunction with the Employee Stock Program (MAP).
In order to strengthen its ability to achieve business targets, the Group created the Matching Stock Program (MSP) as a long-term remuneration instrument -- with both incentive and risk character - to involve management in the ownership of the company. The MSP entitles qualifying individuals to subscribe to so-called "Phantom Stocks". Participants in MSP must be in a non-terminated service or employment relationship with MTU Aero Engines Holding AG, Munich, Germany, or one of its German subsidiaries at the date of subscription to such shares. The fair value of the Phantom Stocks is recognized on a time-apportioned basis as personnel expense and, at the same time, within equity (capital reserves) until the exercise date (vesting date). The total expense, recognized over the period until the Phantom Stocks are exercised, is determined on the basis of the fair value of the Phantom Stocks granted. The expense for the first three months of 2010 was € 0.2 million (January – March 2009: € 0.1 million).
Revenue reserves comprise the retained earnings of consolidated group companies, and earnings after taxes (EAT) for the first three months of 2010 amounting to € 32.6 million (January – March 2009: € 31.0 million). Revenue reserves increased by the amount of first-quarter earnings.
The following table shows the number of treasury shares bought back and issued to employees under employee participation programs as well as the number of treasury shares and the issued share capital at the end of the reporting period.
| Analysis of changes in shares and subscribed capital | ||||
|---|---|---|---|---|
| Number of shares | Number of shares bought back |
Shares issued to employees |
Number of treasury shares held |
Change in subscribed capital |
| Subscribed capital | 55,000,000 | |||
| Changes: | ||||
| Financial year 2006 | -1,650,883 | -1,650,883 | ||
| Financial year 2007 | ||||
| Share buyback | -2,732,139 | -2,732,139 | ||
| Matching Stock Program (MSP)/June 2007 | 112,612 | 112,612 | ||
| Financial year 2008 (Jan. 1, 2008 - March 18, 2008) | -986,641 | -986,641 | ||
| -5,369,663 | 112,612 | -5,257,051 | ||
| Capital reduction by cancellation of shares (on March 18, 2008) | 3,000,000 | -3,000,000 | ||
| Status after capital reduction (March 18, 2008) | -5,369,663 | 112,612 | -2,257,051 | 52,000,000 |
| Financial year 2008 (March 19, 2008 - December 31, 2008) | ||||
| Share buyback (May 2 - December 31, 2008) | -1,164,963 | -1,164,963 | ||
| Employee Stock Program (MAP)/June 2008 | 192,959 | 192,959 | ||
| Financial year 2009 (January 1, 2009 - December 31, 2009) | ||||
| Employee Stock Program (MAP)/June 2009 | 150,863 | 150,863 | ||
| Financial year 2010 (January 1, 2010 - March 31, 2010) | ||||
| Employee Stock Program (MAP)/retrospective adjustment | ||||
| from June 2009 *) | 632 | 632 | ||
| Share buyback/employee shares | ||||
| Treasury shares and subscribed capital (at March 31, 2010) | -6,534,626 | 457,066 | -3,077,560 | 52,000,000 |
*) relates to retrospective agreement with employees
As a result of the treasury shares bought back by March 31, 2010, the issue of shares to group employees in conjunction with the exercise of the first tranche of the Matching Stock Program (MSP) in the financial year 2007 and the Employee Stock Program (MAP) in the financial years 2008 and 2009 as well as the share capital reduction carried out on March 18, 2008 by cancellation of shares, the weighted average number of shares in circulation during the first three months of 2010 was 48,922,019 shares (January - March 2009: 48,770,945 shares). At March 31, 2010, in total, 48,922,440 MTU Aero Engines Holding AG, Munich, shares were in issue (March 31, 2009: 48,770,945 shares).
The following table shows changes in the number of bought-back shares, the month-end number of treasury shares and the weighted average number of shares in circulation:
| 2008 2010 |
2007 2009 |
||||||
|---|---|---|---|---|---|---|---|
| Number of shares | Balance at beginning of month |
Buyback/ 51.728.736 Exercise MSP/ Cancellation/ |
Balance at end of month |
Buyback/ Exercise MSP/ Cancellation/ |
Balance at end of month |
||
| MAP | MAP | ||||||
| Balance at January 1 | 48,921,808 | -3,078,192 | 48,770,945 | -3,229,055 | |||
| January | 48,921,808 | 48,921,808 | 48,770,945 | 48,770,945 | |||
| February | 48,921,808 | 48,921,808 | 48,770,945 | 48,770,945 | |||
| March | 48,921,808 | 632 | 48,922,440 | 48,770,945 | 48,770,945 | ||
| Share buyback/ | |||||||
| exercise of MSP) MAP) | -3,077,560 | -3,229,055 | |||||
| Shares cancelled | |||||||
| Treasury shares (March 31) | -3,077,560 | -3,229,055 | |||||
| Weighted average at March 31 | 48,922,019 | 48,770,945 |
*) including the issue of 112,612 shares to employees in June 2007 in conjunction with the Matching Stock Program (MSP) and the issue of 192,959 shares in June 2008 and 150,863 shares in June 2009 to group employees in conjunction with the Employee Stock Program (MAP)
Other comprehensive income consists of all amounts recognized directly in equity resulting from the translation of the financial statements of foreign subsidiaries, the effects of recognizing changes in the fair value of financial instruments directly in equity (where the conditions for hedge accounting are met), net of related deferred income taxes recognized directly in equity (see Consolidated Statement of Changes in Equity for more detailed information).
Other provisions consist mainly of personnel-related obligations, pending losses on onerous contracts and warranties. Provisions for pending losses on onerous contracts relate to risks concerning the order backlog for Commercial Engine Maintenance business.
At March 31, 2010 contingent liabilities relating to business combinations totalled € 161.1 million (December 31, 2009: € 153.6 million).
All derivative and non-derivative financial obligations of group entities at the end of each relevant reporting period are presented as financial liabilities. Financial liabilities comprise the following:
| Total | Non-current | Current | |||||||
|---|---|---|---|---|---|---|---|---|---|
| in € million | March 31, 2010 Dec. 31, 2009 Jan. 1, 2009 March 31, 2010 Dec. 31, 2009 Jan. 1, 2009 March 31, 2010 Dec. 31, 2009 Jan. 1, 2009 | ||||||||
| Bonds | |||||||||
| Convertible bond | 146.0 | 145.0 | 141.5 | 146.0 | 145.0 | 141.5 | |||
| Interest liability on | |||||||||
| convertible bond | 0.7 | 3.9 | 3.9 | 0.7 | 3.9 | 3.9 | |||
| Liabilities to banks | |||||||||
| Revolving Credit Facility (RCF) | 61.2 | 61.2 | |||||||
| Promissory notes | 66.4 | 65.4 | 64.7 | 64.6 | 1.7 | 0.8 | |||
| Other liabilities to banks | 11.2 | 14.6 | 21.3 | 9.7 | 11.2 | 14.6 | 11.6 | ||
| Liabilities to related | |||||||||
| companies*) | 4.0 | 4.0 | |||||||
| Other financial liabilities | |||||||||
| Finance lease liabilities | 25.8 | 25.8 | 34.0 | 24.5 | 24.6 | 25.7 | 1.3 | 1.2 | 8.3 |
| Purchase price adjustment | |||||||||
| Daimler AG | 15.0 | 15.0 | |||||||
| Loan from the province of | |||||||||
| British Columbia to | |||||||||
| MTU Maintenance Canada | 14.2 | 12.9 | 11.1 | 14.2 | 12.9 | 11.1 | |||
| Derivative financial liabilities | 38.8 | 12.2 | 48.4 | 16.6 | 4.6 | 23.5 | 22.2 | 7.6 | 24.9 |
| Total Financial liabilities | 307.1 | 279.8 | 336.4 | 251.8 | 238.8 | 200.4 | 55.3 | 41.0 | 136.0 |
*) MTU Versicherungsvermittlungs- und Wirtschaftsdienst GmbH. Munich. which is not consolidated on the grounds of immateriality
The currency used to finance the group is the Euro. This relates mainly to loans, a convertible bond issue and bank overdrafts (Revolving Credit Facility). On August 3, 2009, the existing revolving credit facility of € 250.0 million was replaced by a new credit facility with a term of 3 years. The MTU Group therefore has access to an overdraft facility of € 100.0 million with two banks.
Of these new credit facilities totalling € 100.0 million, an amount of € 29.3 million (December 31, 2009: € 27.7 million) was being utilized at March 31, 2010 for guarantees. Interest on credit lines actually drawn down is charged on the basis of customary interest reference rates plus a margin. A commitment fee is paid on credit facilities which are not being utilized.
On June 3, 2009, MTU placed four promissory notes with a total nominal volume of € 65.0 million. The promissory notes, which help to diversify group financing further, are payable in full on the following maturity dates:
| Maturity | Note amount (nominal) in € million |
Interest rate |
|---|---|---|
| June 5, 2012 | 1.5 | fixed |
| June 5, 2014 | 11.5 | fixed |
| June 5, 2012 | 27.0 | variable*) |
| June 5, 2014 | 25.0 | variable*) |
| 65.0 |
*) 6-month Euribor plus margin
The cash inflow from the promissory notes was used to reduce bank liabilities under the Revolving Credit Facility (RCF old). The promissory notes were measured initially at their fair value (corresponding to the nominal amount) net of transaction costs amounting to € 0.4 million. At subsequent reporting dates, they are measured at amortized cost.
MTU Aero Engines Finance B.V., Amsterdam, Netherlands, issued a convertible bond during the financial year 2007 with a total volume of € 180.0 million (divided into 1,800 partial bonds). In September and October 2008, MTU bought back partial convertible bonds (before maturity date) with a nominal volume of € 27.2 million. Further information is provided in the notes to the Consolidated Financial Statements in the Annual Report 2009 (section 34, Financial liabilities). The security has a par value of € 100,000 per bond and a term to maturity of five years. The bonds can be converted into registered common shares of the company corresponding to a proportionate amount (€ 1 per share) of the company's total share capital. The bonds are entitled to receive profits from the beginning of the financial year in which they are issued and the subscription rights of existing shareholders are excluded.
At a conversion price of € 49.50, the conversion ratio at issue date was 2,020.20. The coupon rate is fixed at 2.75 %, payable annually on February 1. The issuing company is Amsterdam-based MTU Aero Engines Finance B.V. which is wholly owned by MTU Aero Engines Holding AG, Munich.
The present value of the future contractually agreed cash flows under the Convertible Bonds Underwriting Agreement dated January 23, 2007 has been discounted using a market interest rate i.e. the rate the company would have had to pay if it had issued a non-convertible bond. The interest expense that will be recognized over the term of the convertible loan results from unwinding the obligation using the market interest (5.425 %) used to determine its present value.
Information regarding the retrospective change in presentation of the convertible bond as a non-current financial liability is provided in section 4, Adjustments to the condensed interim consolidated financial statements.
Contract production liabilities comprise the following:
| Contract production liabilities | ||
|---|---|---|
| Current | ||
| in € million | March 31, 2010 | Dec. 31, 2009 |
| Advance payments received for contract production | 842.8 | 847.6 |
| of which relating to: | ||
| Contract production receivables | -264.3 | -240.6 |
| Total Contract production liabilities | 578.5 | 607.0 |
Advance payments received relate mainly to military engine program participations.
Any surplus of advance payments received over contract production receivables with a term of more than 12 months are discounted to their present value.
Other liabilities comprise the following items:
| Total | Non-current | Current | ||||
|---|---|---|---|---|---|---|
| in € million | March 31, 2010 Dec. 31, 2009 March 31, 2010 Dec. 31, 2009 March 31, 2010 Dec. 31, 2009 | |||||
| Taxes | 9.8 | 8.4 | 9.8 | 8.4 | ||
| Social security | 2.3 | 2.0 | 2.3 | 2.0 | ||
| Employees | 54.2 | 40.5 | 3.5 | 3.3 | 50.7 | 37.2 |
| Accrued interest expense | 21.0 | 21.4 | 21.0 | 21.4 | ||
| Maintenance obligation | ||||||
| for engines | 9.1 | 8.1 | 9.1 | 8.1 | ||
| Sundry other liabilities | 23.6 | 18.2 | 1.3 | 1.2 | 22.3 | 17.0 |
| Total Other liabilities | 120.0 | 98.6 | 34.9 | 34.0 | 85.1 | 64.6 |
Other taxes amounting to € 9.8 million (December 31, 2009: € 8.4 million) relate to payroll (including employees' solidarity surcharge), church taxes and sales taxes. Social security liabilities relate mainly to contributions to employees' accident insurance associations amounting to € 1.7 million (December 31, 2009: € 1.5 million) and liabilities to health insurance agencies amounting to € 0.6 million (December 31, 2009: € 0.5 million).
Liabilities to employees comprise holiday entitlements, flexi-time credits, obligations relating to pre-retirement part-time working arrangements as well as obligations resulting from earlier efficiency improvement programs. Obligations for profit-shares and bonuses, for specific liabilities relating to pre-retirement part-time working arrangements, for long-service awards and for structural measures taken in conjunction with the introduction of the ERA (Entgelt Rahmenabkommen – Framework Agreement on Pay) are included in other provisions.
Non-current payments received on account from customers for contract production are discounted over the term of the advance payments using appropriate market interest rates and the deferred interest recognized as a liability within other liabilities until the engine is delivered. The interest expense relates to advance payments for long-term military contract production amounting to € 16.2 million (December 31, 2009: € 16.6 million) as well as payments on account relating to long-term commercial engine programs amounting to € 4.8 million (December 31, 2009: € 4.8 million).
This line item relates mainly to obligations for the maintenance of engines made available to airlines on a temporary basis (as part of commercial MRO activities) while the airlines' own engines are being maintained or repaired.
Sundry other current liabilities cover numerous smaller individual obligations.
MTU does business with MTU Maintenance Zhuhai Co. Ltd., Zhuhai, China, as part of its ordinary operating activities, buying and selling various products and services on an arm's length basis. There were no trade receivables due from this entity at March 31, 2010. Trade payables at that date amounted to € 1.4 million. Income recognized during the first three months of the year totalled € 0.4 million with expenses totalling € 0.1 million.
MTU does business with entities that are accounted for at equity and at cost, as part of its ordinary operating activities, buying and selling various products and services on an arm's length basis. Entities accounted for at equity and at cost are disclosed in the notes to the Consolidated Financial Statements in the Annual Report 2009 (section 45.1.2 List of major shareholdings). Trade receivables at March 31, 2010 amounted to € 43.6 million. Trade payables at that date amounted to € 60.6 million. Income recognized during the three-month period under report amounted to € 132.8 million. Expenses totalled € 90.2 million.
MTU Group companies did not enter into any material contracts with members of the Board of Management, the Supervisory Board other key management personnel, or with companies in whose management or supervisory boards those persons are represented. The same applies to close members of the families of those persons.
Contingent liabilities and other financial obligations at March 31, 2010 amounted to € 151.6 million (December 31, 2009: € 144.5 million). The increase of € 7.1 million was mainly due to exchange rate factors. Contingent liabilities and other financial obligations are not material to the MTU Group as a whole. As in previous periods, no amounts fell due for payment during the period under report. Similarly, no amounts are expected to be paid during the financial year 2010. Information regarding the composition and nature of contingent liabilities and other financial obligations is provided in the notes to the consolidated financial statements in the Annual Report 2009 (section 43).
Purchase commitments for intangible assets and property, plant and equipment amounted to € 31.4 million at March 31, 2010.
The impact, nature and occurrence of major events arising during the reporting period are described in the Selected Explanatory notes and in the Interim Group Management Report.
In its rating published on April 19, 2010 Fitch gave MTU's a corporate creditworthiness rating of "BBB-" (investment grade). The ratings issued by S&P ("BB+" with stable outlook) and Moody's ("Ba1" with positive outlook) remained unchanged.
No other significant events occured after the end of the interim reporting period (March 31, 2010) and prior to the date of authorization for issue of the quarterly financial report on April 19, 2010.
Telephone Conference on first quarter 2010 earnings April 20, 2010 Annual General Meeting for the financial year 2009 April 22, 2010 Telephone Conference on second quarter 2010 earnings July 27, 2010 Telephone Conference on third quarter 2010 earnings October 26, 2010 Analysts and Investors Conference 2010 November 9, 2010
| [email protected] | |||||
|---|---|---|---|---|---|
| [email protected] | |||||
| Telefax | +49 (0) 89-1489-95062 | ||||
| Telephone +49 (0) 89-1489-3911 | |||||
| Telephone +49 (0) 89-1489-8313 | |||||
| Investor Relations |
The German version takes precedence.
This report contains forward-looking assertions which reflect the current view of the management of MTU with regard to future events. Those disclosures are characterized by terms such as "expect", "is likely that", "assume", "intend", "estimate", "aim", "set as target", "forecast", "outlook" and similar phrases and generally include information relating to expectations or targets for revenues, (adjusted) EBIT or EBITDA or other performance measures. Forward-looking assertions are based on the latest forecasts, assessments and expectations. Such information should therefore be carefully considered. Assertions of this kind are subject to risk factors and uncertainties which are often difficult to assess and which are generally not within the control of MTU. Such factors may unfavorably affect revenues and expenses. If these or other risk factors and uncertainties do in fact materialize, or if the assumption on which assertions are based turn out to be incorrect, MTU's actual earnings may vary from those contained in, or implied by, these assertions. MTU cannot guarantee that expectations or targets will be met. MTU does not accept any responsibility for up-dating future-looking assertions by taking account of any new information or future events or other matters.
In addition to IFRS-based key figures, MTU also discloses some non-GAAP key performance indicators (e. g. EBIT, EBIT margin, EBITDA, EBITDA margin, (where applicable EBIT adjusted, EBIT margin adjusted), free cash flow and gross/net financial liabilities) which are not covered by financial reporting standards. These key performance indicators should be seen as supplementary information and not as a replacement for disclosures made in accordance with IFRS. Non-GAAP key performance indicators are not covered by IFRS or any other generally accepted set of financial reporting rules. Other entities may, under certain circumstances, use different definitions for these items.
MTU Aero Engines Holding AG Dachauer Straße 665 80995 Munich • Germany Tel. +49 89 1 489-0 Fax +49 89 1 489-5500 www.mtu.de
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