Commercial OEM programmes boost MTU 2010 profits

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MTU has reported a higher than expected operating profit for 2010, with commercial OEM programmes showing the greatest increases.

At €2.71 billion ($3.72 billion), total annual revenues in 2010 remained below the forecasted €2.75 billion but were still up 4% over 2009 sales. Earnings before interest and tax were up 7% to €311.3 million from €292.3 million in 2009.

Net profit at the German engine manufacturer and MRO provider grew 0.9% to €142.2 million from €141 million in 2009, with a minor change in the return on sales (EBIT margin) to 11.5% from 11.2% in 2009.

The greatest revenue increases were registered in the commercial engine manufacturing business, where sales grew 12% to €1.2 billion in 2010. This was mainly due to the company's participation in the International Aero Engine V2500, Pratt & Whitney PW2000 and General Electric CF6-80C programmes.

The Boeing 787 delays led to a "shift" in revenue terms away from the GEnx programme for the time being, says MTU.

While the commercial engine MRO business remained largely unchanged - sales grew 1.6% to €1.1 billion - the sector's profitability was up significantly, with the respective EBIT growing 23% to €80.3 million.

For 2011, MTU expects total revenue increases of 7-8%, mainly due to anticipated traffic increases in Asia and North America. The central growth driver will be the commercial engine manufacturing sector with an expected growth of 15-20%. The commercial engine MRO and spare parts businesses are forecast to grow by 5-10%.

A dividend of €1.10 per share - 18% above 2009's 93 cent dividend - is to be proposed in May. The increase "comes on the back of our positive expectations for the company's growth over the next few years", says chief financial officer Reiner Winkler.

The company plans to increase its investment in research and development by 20% to €148.1 million. However, this is partly to compensate for a 15.5% drop in R&D funding from outside the company. Total expenditure is expected to rise 3.7% to €238.7 million.