MUNICH (dpa-AFX) - The recovery of aviation from the Corona crisis is boosting Munich-based engine manufacturer MTU. After the day-to-day business generated a surprisingly high profit in 2022, the management board aims to exceed the record result achieved in 2019 already in 2023 - and thus a year earlier than planned. An adjusted operating profit of 750 to 775 million euros is expected, explained CFO Peter Kameritsch when presenting the annual figures in Munich on Tuesday. Shareholders can look forward to the highest dividend in the group's history as early as 2022. Nevertheless, the MTU share price fell after the news.

Shortly after the start of trading, the share price plummeted by almost four percent. In the morning, it was still the biggest loser on the Dax, losing almost two percent to 223.10 euros. Analysts had already expected record operating profits for 2023 of the magnitude MTU's management is now targeting.

The MTU share had risen sharply in recent months. Since a low at the end of September, its price has risen by around 50 percent. Compared to the turn of the year, the increase amounts to about ten percent. However, the record high of 289.30 euros reached shortly before the Corona pandemic is still some way off.

Last year, MTU increased its sales by 27 percent to a good 5.3 billion euros. Although this was the highest revenue in the company's history, it fell short of its own target, which it had raised in the fall to between 5.4 and 5.5 billion euros.

Due to delays in the supply chains, fewer engines had recently left the MTU shops than planned, both in engine production and in the maintenance business, explained the new CEO Lars Wagner, who took over the helm from long-serving MTU CEO Reiner Winkler at the beginning of 2023. As a result, engines often have to stay longer in the workshop because necessary parts arrive late.

Despite these problems, the DAX-listed group increased its adjusted operating profit (adjusted EBIT) by 40 percent to 655 million euros - even more than planned and more than expected by industry experts. This left 12.3 percent of sales as adjusted operating profit, 1.1 percentage points more than a year earlier. Analysts had only expected an increase to 11.7 percent.

Net profit even increased by 44 percent to 333 million euros. Even though MTU has not yet reached pre-crisis levels in terms of profit, shareholders are expected to receive a dividend of 3.20 euros per share, more than ever before and more than analysts had estimated. In view of its low level of debt, the Group would also have to consider a share buyback from 2024, said CFO Kameritsch.

Looking ahead to the current year, however, MTU's top management had to abandon its plan, issued as recently as November, to increase revenues to between 6.4 and 6.6 billion euros. Now, the target is only 6.1 to 6.3 billion euros. The board explained this with the changed exchange rate between the dollar and the euro. "That has a tremendous penetrating power," Kameritsch said.

Last year, for example, the dollar had initially gained strongly in value, but then lost significantly again. Aircraft and their parts are traded worldwide in dollars - but MTU prepares its financial statements in euros. In the fall, MTU's management had raised its revenue forecast for 2022 in view of the dollar exchange rate and set the bar quite high for 2023 as well. Too high, as it now turned out.

Kameritsch explained that the dollar exchange rate would have much less impact on operating profit. This is because the Group has hedged against such fluctuations with financial transactions. For this reason, too, the Management Board expects the adjusted operating margin for 2023 to remain at the high level of 2022.

With sales now targeted at 6.1 to 6.2 billion, adjusted operating profit would then be 750 to 775 million euros. The ambition is to exceed the previous record figure of 757 million from 2019, Kameritsch said. The board had actually not targeted this until 2024.

MTU joins forces with other engine manufacturers such as General Electric and Raytheon Technologies subsidiary Pratt & Whitney to build engines for aircraft made by major manufacturers Airbus, Boeing and Embraer. The biggest revenue generator is Pratt & Whitney's geared turbofan engine, which is used primarily on the highly popular medium-haul jets of the Airbus A320neo model family.

According to Wagner, the fact that the world's largest aircraft manufacturer Airbus was unable to deliver as many jets as planned last year was not due to MTU. The company ultimately delivered all the engines it had planned last year, despite some fluctuations over the months. MTU also operates its own final assembly line for the geared turbofan in Munich, assembling about one-third of all engines of this type worldwide.

The manufacturer has no shortage of orders. At the end of 2022, the order backlog stood at 22.3 billion euros, slightly higher than a year earlier. Meanwhile, the number of employees rose by seven percent to 11,273. In the current year, MTU will hire 600 to 700 people in Munich alone, Wagner said.

The manufacturer needs new engineers not only for the development of a new engine for the next generation of medium-haul jets but also for the future European air combat system FCAS, on whose propulsion system it is working. Wagner also hopes that this development will provide new insights into future engine types for commercial aviation - for example, in the field of composite materials. Thanks in part to FCAS, the Executive Board expects military sales to increase by ten percent in the current year. This is about twice as much as was forecast in the fall./stw/mne/stk