07-05-2025
MTU Aero Engines AG (MTUAF) Q1 2025 Earnings Call Highlights: Strong Revenue Growth Amid Tariff ...
Q : Can you provide more details on the potential impact of tariffs and the mitigation measures MTU Aero Engines AG is considering? A : Lars Wagner, CEO, explained that the tariff situation is volatile, and MTU is assessing the impact on OEM and MRO operations. They are exploring countermeasures such as rerouting engine modules and revisiting shipments to avoid tariffs. Contract management is also being reviewed to determine if tariffs can be passed to customers. Wagner remains optimistic about finding a solution due to the industry's importance globally.
The company faces potential headwinds from additional US tariffs, which could affect profitability despite mitigation efforts.
US tariffs have caused confusion and uncertainty, with a potential mid- to high-digit million euro impact before mitigation.
Adjusted EBIT increased by 38% to EUR300 million, with a strong margin of 14.3%, driven by a favorable business mix in commercial OEM.
The company opened a second MRO shop in China, enhancing its capacity and positioning it as the largest MRO facility globally.
MTU Aero Engines AG ( MTUAF ) reported a 25% increase in group revenues, reaching nearly EUR2.1 billion in the first quarter of 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
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Q: How did the OEM business perform in Q1, and what drove the margin improvement? A: Peter Kameritsch, CFO, stated that OEM revenues increased by 11% to EUR620 million, with a margin of 28.4%. The margin improvement was driven by a favorable business mix, including higher spare engine sales, which typically have better pricing. However, this margin level is not expected to be sustainable throughout the year as OE production ramps up.
Q: What is the outlook for MTU's MRO segment, and how significant is the GTF engine's contribution? A: Kameritsch noted that MRO revenues increased by 33% to EUR1.5 billion, with the GTF engine contributing around 34% of MRO revenues. The MRO segment is expected to grow between 10% and 15% excluding GTF, while GTF itself is projected to grow between 20% and 25%.
Q: Can you elaborate on the expansion with GE and its potential impact on MTU's business? A: Wagner highlighted that the expansion with GE, including MRO services for LEAP and GEnx engines, represents a multi-billion-dollar opportunity over the programs' lifetimes. This long-term investment is expected to enhance MTU's market position, with more details to be shared at the upcoming Capital Market Day.
Q: How is MTU handling the increased R&D expenses, and what are the main drivers? A: Kameritsch explained that the R&D increase in Q1 was due to a one-time imbalance payment related to the GTF Advantage program. This payment reflects MTU's 18% program share and is not expected to recur in the following quarters. The ongoing R&D efforts are aligned with MTU's strategic goals and program commitments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
