Mtu Aero Engines Hldgs Ag

Good morning, ladies and gentlemen. Welcome to our conference call for MTO's H1 2024 results. As usual, we start with a review and some key messages presented by Lars. Peter will start with a financial overview and a more detailed look into our OEM and MRO segment. After that, Lars takes over and walks you through the guidance for 2024. This will then end the presentation and we will open the call for questions. Let me now hand over to Lars for the review.

All right. Thank you, Thomas. And also welcome from my side. Good morning, everyone. Good that you are on board. Let me start with the regular view on the market environment. Worldwide passenger traffic continued its path and grew 9.1% in June. Within that, domestic traffic grew 4.3%, while international traffic rose 12.3% in total, with double-digit growth in most regions. Strong ticket sales and consistently high load factors indicate ongoing high demand for air travel. For 2024, IATA adjusted its passenger traffic expectations from a 10% growth to a nearly 12% growth. Over the next 20 years, IATA expects worldwide passenger traffic to increase an average by 3.8% per year. Cargo flights also remained on a high level. The disruptions in maritime transport combined with the tensions in the Red Sea, the drought in the Panama Canal and the accident at the Baltimore Bridge led to an increased demand for air freight. Aircraft movements in the cargo segments were 30.5% higher compared to 2019. This strength in flying activity fuels the demand in the aviation sector. The strong market demand remained encouraging in the second quarter due to continued strong passenger traffic, while supply chain challenges continued to limit production. Beyond the demand outlook, the announcement by Airbus to postpone the increase of the production rates illustrates the challenges in the aerospace supply chain. While our own MTU supply chain is performing well and is working in line with our expectations, this situation continues to limit production of new aircraft. This results in lower new aircraft deliveries and slower retirements of older aircraft. And yes, there are first positive trends in spare parts provisioning, which means that we do see better availability of spare parts in the MRO. This allows us to improve turnaround time and translate into more inductions into the shops. As described already at our Q1 call, This has a knock-on effect on spare parts order momentum. These trends are already visible in our Q2 results. Spare part sales have improved and the progress makes us confident to achieve our full year guidance. However, supply still can't keep pace with the demand. A higher portion of spare and lease engines as part of the OE sales continued in the second quarter and supports our customers. As a side effect, the tight market brings strong opportunities on the leading market where we are well placed with our subsidiary MLS. All in all, we see positive developments and we feel confident that we're moving in the right direction with an acceleration expected in the second half. Let me now move on to the status of the GTS fleet management plan. Since the announcement of the GTF leak management plan program in September last year, we made a lot of progress. Our efforts to improve turnaround times for GTF MRO shop visits are beginning to be a first fruit. With our three MRO shops, MTU Hanover, EME Aero Poland, and MTU Chuhai, we not only have the necessary capacity to tackle additional MRO work, but we also benefit from the excellent know-how to optimize turnaround time. A dedicated task force has been set up to focus on benchmark turnaround times and to identify cost-saving potentials. Identified measurements are shared among all MRO network partners. Our partner Pratt & Whitney makes further progress with its production ramp-up of powder metal parts. Since end of last year, GTF engines with clean powder metal parts are being delivered to Airbus, whereas in MRO delivery of clean powder metal parts, we see the ramp to continue through the course of this year. With sufficient MRO capacity and secured parts availability, we were able to execute heavy GT upship shop visits even below 100 days. While this is not the current standard TIT, it shows what can already be done and we're heading into the right direction. In the meantime, the peak number of aircraft on ground was reached in Q2. and stands well below the initially expected 650 aircraft. This is partly due to the airline's good fleet management and the deliveries of additional SP engines to the market. And finally, further progress has been made with respect to airline compensation. 20 agreements have been signed with airlines so far, covering roughly 65% of the GTF engine fleet affected. Let's move to some other positive news from the commercial and military business. July was a great month for our commercial business. For the largest engine in our portfolio, we saw the delivery of the first production version of the GE9X engine to Boeing, where the official flight test campaign for certification of the Boeing 777X has started. Entry into service is targeted for 2025. Earlier in the month, Cebu Pacific announced an agreement with Airbus to firmly order 102 A321neo aircraft with purchase rights for another 50 aircraft. This fleet will be equipped with GTF engines. And finally, on the commercial programs, this year's Farnborough Airshow was a great success for MTU with orders placed worth roughly US$800 million. Further orders and options for hundreds of GTS engines were collected, bringing the total backlog for that engine family beyond 11,000. The GE9X for the Boeing 777X and the GENX powering the Boeing 787 also scored particularly well. In addition to that, we received orders for the V-25 powering nine C-390 military transport aircraft. This great success demonstrates again that we do have the right future-oriented engines in our portfolio. Let's move to military. Very good news also on our military business. As you are all aware, the Eurofighter engine is our key revenue contributor in military business. Due to the current political situation, we see increasing interest from European customers to place additional orders for the Eurofighter aircraft. Germany Italy and Spain are expected to order additional aircraft. Further potential comes in export markets, resulting in opportunities to market a low three-digit number of Eurofighters over the next 10 years. In June, we signed with Safran Helicopter Engines a cooperation agreement to create a 50-50 joint venture called Eura, which is short for European Military Rotorcraft Engine Alliance. This newly created company will form the core of a larger program which will collaborate with industrial and technological partners from several other European nations. Focus of the joint venture is the development of a new heavy helicopter engine to power the next generation of European military helicopters, scheduled to enter into service by 2040. From our ongoing efforts to improve our production facilities, we can finally announce the official opening of our new turbine disc manufacturing hall. With this facility and its unique level of automation, we can realize significant process improvements, shorter processing times by up to 550% and savings up to a third of the previous cost. Let me now hand over to Peter for the financials.

Yes, thanks, Lars, and also a warm welcome from my side. In the first half year 2024, adjusted group revenues were up 10% to 3.4 billion euros, and in US dollar terms, revenues were up 11%. EBIT adjusted increased 16% to 470 million euros, reaching a margin of 13.7%. This high profitability was supported by all segments, with a strong contribution from a healthy product mix in commercial OEM as well as in commercial MRO. Net income adjusted was up 14% to €342 million. And finally, free cash flow stood at €105 million. Ongoing supply chain issues kept working capital high. Within these numbers, there has not been yet any cash outflow for customer support payments regarding the GTF fleet inspection program. Now let's look at the details of our business segments. And let me start with the OEM segment. Total OEM revenues increased 8% to 1.176 million euros. Military revenues were up 19% to 272 million euros, mainly due to TP400 and next generation fighter engine. Commercial business revenues in Euro rose 5% to 903 million euros. And within that, organic OE revenues in dollars were up in the higher 30% range, mainly driven by higher GTF and business chat deliveries. As in Q1, we saw a healthy mix supporting profitability. On a quarterly basis, OE revenues were up in the low 30% range. Organic spare parts sales in US dollars were up mid-single-digit. Main driver were white-body platforms, B2-5, and business chat engines. On a quarterly basis, spare parts revenues were up in the low teens. EBIT adjusted in absolute numbers increased 10% to 288 million euros, resulting in an increase in the margin to 24.5%. EBIT was supported by higher military revenues, a more favorable business mix in the new engine sales and increased spare part sales. So now let's turn to the commercial MAO segment. Reported MAO revenues and organic revenues were up 11% to 2.3 billion euros. main drivers were the GE90, GenX and our lease engine business. GTF MRO share was at 30% which is below our previous expectation for the full year mainly due to a lower material content in the shop visits. EBIT adjusted increased 29% to 183 million euros resulting in a margin of 7.9%. The higher EBIT adjusted margin was the result of a better mix in independent business, while the share and material intensity of GTF MO was lower. At this point, I would like to hand back to Lars for some words on our guidance 2024.