MTU's targets for the financial year 2018 are as follows:
|Forecast 2018||Actual 2017|
|Revenues||~ 4.2 bn €||3.9 bn €|
|Adjusted EBIT||~ 640 m€||573 m€|
|Net Income adjusted||~ 450 m€||405 m€|
|Free Cashflow Conversion||~ 40-50%||37%|
MTU has ﬁrmed up its forecasts for the ﬁnancial year 2018 compared to the outlook presented in the Annual Report 2017.
Growth predictions for the commercial spare parts business, as well as for the commercial maintenance business were adjusted slightly upward, which has a positive effect on earnings potential.
MTU expects growth in its commercial OEM business to be slightly higher than originally forecast, due to a more positive trend in spare part sales. The main growth driver in the spare parts business is the V2500 program.
Growth in the new engine business is expected to accelerate in the second half of the year, in which deliveries for the PW1000G programs are set to double.
Revenues from the military engine business are expected to remain stable in 2018.
MTU’s full-year forecast for its commercial maintenance business is now for revenues expressed in U.S. $ to grow by around 20% in 2018.
For the group as a whole, assuming an exchange rate of U.S. $ 1.20 to the euro, MTU forecasts an increase in revenues to approximately € 4,200 million (2017: € 3,897 million). MTU expects the group’s operating proﬁt (EBIT adjusted) for 2018 to increase to around € 640 million (2017: € 573 million). In its original forecast, MTU had anticipated only moderate earnings growth.
Changes in the product mix in the commercial OEM business, which compared to the previous year may have a negative impact on operating proﬁt, are likely to be more than compensated for by growth in the commercial spare parts and maintenance business.
Adjusted earnings after tax are expected to rise in 2018 to around € 450 million (2018: € 405 million).
2018 will again be another year of substantial investment spending. However, MTU plans to compensate for this cash outflow through its operating activities and achieve a higher free cash flow conversion rate (ratio of free cash flow to net income adjusted) compared with the 2017 financial year. The current forecast foresees a cash flow conversation rate in the order of 40 to 50% (2017: 37%).
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