Former DaimlerChrysler subsidiary could go to stock market by middle of the year

MTU Aero Engines is preparing itself for a possible share offering later this year. The company, which until 2003 was a wholly owned subsidiary of DaimlerChrysler, is now 100% owned by US-based private equity investor Kohlberg Kravis Roberts (KKR). It is making changes to its financial structure and reporting in preparation for a possible public offering of shares.

The company has almost completed its switch to reporting in compliance with International Financial Reporting Standards (IFRS), necessary for an IPO.

"We are preparing to be ready to go to the stock market by the middle of 2005," says MTU. "But it is not yet decided whether or when we would go to the stock market."

It has not yet been decided what percentage of shares would be involved in any IPO. KKR declines to comment on its plans for MTU.

Meanwhile, MTU reported a 35% increase in cashflow in 2004, following a restructuring and cost-cutting programme. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose from €176 million ($228 million) in 2003 to €247 million in 2004 – an increase of 40%.

The results were boosted by continuing improvements in efficiency as well as a rise in air traffic leading to greater demand for spare parts and maintenance, repair and overhaul (MRO) services, says the company. "We expect to see a further upswing in 2005," says chief executive Udo Stark.

The company reduced its debt by €200 million in 2004, and by a further €130 million in 2005, leaving it with €55 million bank debts. It says it is planning to repay this during the coming year.

However, the weak dollar has had an adverse impact on the company, particularly in commercial sales and MRO activities, leaving it with a sales increase of just ?41 million year-on-year to €1.99 billion. Adjusted to take into account the dollar exchange rate, the increase would have been 9%, taking it to €2.14 billion.

R&D spending increased to a record €233 million in 2004, and Stark says MTU will spend about ?200 million on R&D in the coming year. "The years ahead of us will be years of investment – we do not intend to skimp on our future."


Source: Flight International