Mtu Aero Engines Hldgs Ag

Good morning ladies and gentlemen. Welcome to MTU's Q1 2025 results call. As usual, we will start with a look at the past quarter with a review from Lars. Peter will give a financial overview and a deeper look into the segment results. Following that, Lars will walk you through the pre-release guidance update for 2025. This then ends the presentation and we will open the call for questions. And with that, I'll hand over to Lars for the review.

All right, thank you, Thomas, and a warm welcome from my side. Good to have you with us today. Let me start with some words on the market environment. Global passenger traffic increased by 5.3% in the first three months of 2025. Within this, international traffic improved by 7.7%, while domestic traffic increased by only 1.4%. Global load factors remained high at around 80%. The number of scheduled flights for April and May looks very promising. Dedicated cargo traffic has continued its growth with a slight increase in Q1 by 2.4% in CDK. This start into the year is very promising for air traffic and the outlook remains positive. Anyway, the announced tariff environment creates uncertainties in the global markets. It remains to be seen how passenger and cargo traffic will be impacted in the coming months. A downturn in the global economy would undoubtedly affect the aviation industry and us. Therefore, this topic is on everybody's watch list. Really good news for the GTF program. In February 2025, the GTF Advantage received its FAA certification, marking another important milestone in the success story of the GTF engine family. The initial deliveries of the GTF Advantage to Airbus are on track for later this year. The Advantage offers the lowest fuel consumption and CO2 emissions for single-ail aircraft, providing more thrust and value, especially for longer-range aircraft like the A321XLR. It delivers 4-8% more take-off thrust, enabling higher payload and longer range. Based on an extensive test program with over 100,000 hours of test flights and 38 million flight hours of in-service operation of the GTF-based version, The advantage ensures increased robustness in service and on-wing times, enhancing customer satisfaction. And to expand the improvement to the actual in-service fleet, the certification of an upgrade package is in the making. This targets to incorporate significant durability improvements from the advantage configuration into the existing fleet during MRO shop visits. Target is to have this package available for its customers next year. Let me conclude the GTF news with some updates on the GTF fleet management plan. The program remains on track and we see progress in shop turnaround times and material flow. Therefore, we are quite optimistic that the aircraft on ground situation will start to trend down in the second half year. Overall, the GTF fleet management plan remains consistent with our previous comments. On the MRO side of the business, we have exciting developments. In March, we celebrated the official opening of our second MRO shop in China, MTU Maintenance Shuhai Gen1 branch, a new site focusing on PW1100 engines. Initially, it will add a yearly capacity of up to 260 engine shop visits, and combined with the main site, MTU Maintenance Shuhai, it will become the largest MRO facility in the world with over 700 shop visits annually. This positions MTU maintenance for continuous strong growth in the global engine MRO market and strengthens the GTF maintenance network with increased capacity and expertise. The new facility was built in just 18 months, with its engine test cell already in operation since summer 23. And the GIN1 branch will start with around 280 employees and will grow to 600 engine experts once fully ramped up. coming from China to the other side of the Pacific, where we are very proud to announce the expansion of our footprint in North America. This expansion allows us to introduce MRO services for the LEAP 1A and 1B engines and implement GenX full-engine MRO services under a new agreement with GE Aerospace. This expansion represents a multi-billion-dollar revenue potential for MTU over the lifetime of both engine programs. MTU Maintenance has been named one of six exclusive premier MRO service providers for LEAP engines globally, allowing us to offer full performance restoration and extensive repair capabilities for these engines. The LEAP is one of the largest engine programs globally and demand for capacity and expert support is high. In addition to the LEAP engine, the Fort Worth facility, which includes a 43,000 square meter space with an engine test facility capable of up to 100,000 pounds of thrust, enables us to also offer full overhaul capabilities for Gen X engines, enhancing our competitiveness and service range in North America even further. By investing heavily in the ramp-up of our MTU maintenance Fort Worth site, we are transforming it from a pure on-site service center into a comprehensive disassembly, assembly, and test facility, delivering state-of-the-art engine maintenance for narrow-body and wide-body engines. These are just two examples of our MRO expansion, GIN1 and Fort Worth, showing that we are expanding the depth and scope of MTU's engine MRO solutions worldwide. thus underlining our trust in the long-term outlook in this business. We are extremely well placed globally to expand our market share and benefit from the outstanding market opportunities in this field. This brings me to a less popular topic of additional US tariffs. US tariffs have caused significant confusion and uncertainty in global markets, making it difficult to predict the impact on air travel. However, We aim to share some information on how we assess the situation and provide some estimates on the direct impact on MTU. As you know, MTU has locations in Europe, Canada and Serbia that are not directly affected by tariffs, especially since aviation products have not been subject to countermeasures by the EU or Canada to date. The main burden of tariffs therefore falls on our US partners and customers, which could potentially increase their costs as tariffs are normally borne by the importer. Our sites in China are either located in a free trade zone or use privileged customs procedure, so we do not expect any direct burden from Chinese import duties on US engines or spare parts here either. We do not see our collaboration with our US partners at risk, as we have established long-term relationships through our RRSP partnerships over the years. Additional capacity and engine maintenance are globally scarce and require significant investments, making quick alterations difficult and impossible. All this cumulates to a possible headwind for our profitability. Before mitigation effects and based on actual delivery routes and volumes, the impact has been assessed to a mid to high double-digit million amount, double-digit million euro amount. Having said this, we are actively monitoring tariffs and are in direct contact with our US partners to mitigate the impacts of the tariff environment. As one example, we are already starting to implement alternative delivery routes on certain modules and achieve an effective avoidance of tariffs on these parts. Now let me hand over to Peter for the financials.

Thanks Lars and also a warm welcome from my side. The first quarter of 2025, we booked group revenues of nearly 2.1 billion euros, marking a 25% increase from last year. In US dollar terms, revenues rose by 22%. Adjusted EBIT increased 38% to 300 million with a margin of 14.3%. This strong margin was primarily driven by a favorable business mix in commercial OEM. Similarly, Adjusted net income improved 41% to 221 million euros. On free cash flow with 150 million euros, we had a very strong start into the year. So now let's go into our two business segments and starting with the OEM segment. Total revenues increased 11% to 620 million euros. Military had, as always, a slow start into the year with a small decrease in revenues to 113 million euros, which is a typical pattern. Commercial business revenues in euros rose 17% to 507 million euros. And within that, organic revenues grew 5%, driven by a rather strong spare engine sales volume. Organic spare part sales in dollars increased mid-teens, supported by mature widebody platforms and narrowbody engines. Adjusted EBIT here was up 35% to 176 million euros, resulting in a margin of 28.4%, primarily reflecting the very favorable business mix in the commercial OEM business. Turning the page and moving on to the commercial MO segment. Reported MO revenues increased 33% to 1.5 billion euros, while US dollar revenues were up 29%. This strong growth was primarily driven by the PW1100G, the CF680, GenX, and the GE90 engines. Adjusted EBIT increased 42% to 125 million euros, resulting in a margin of 8.2%. EBIT margin improved mainly due to volume effects and a better profitability on certain engine programs and contracts. At this point, I would like to head back to Lars for some words on our guidance in 2025. All right, Peter, thank you very much.