MTU Earnings: Strong Start to the Year; Foreign-Exchange Headwinds a Key Area to Watch

Wide-moat MTU Aero Engines reported a robust first quarter, with revenue rising 25% year on year to EUR 2.1 billion and adjusted EBIT up 38% to EUR 300 million (14.3% margin), benefiting from a favorable commercial original equipment manufacturer mix with a higher share of spare parts, and strong maintenance, repair, and overhaul volumes. Free cash flow was a solid EUR 150 million, supported by seasonal working capital tailwinds, though management flagged normalization ahead. MTU revised its 2025 revenue guidance downward to EUR 8.3 billion-EUR 8.5 billion, from the previous range of EUR 8.7 billion-EUR 8.9 billion, citing only foreign-exchange translation effects. The updated forecast reflects a new EUR/USD assumption of 1.10 versus 1.05 previously. Importantly, EBIT, net income, and free cash flow targets remain unchanged, reflecting management’s confidence in cost controls and mix to absorb translation effects.