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UPDATE 2-MTU Aero ups 2017 profit goal on strong spare parts business
October 26, 2017 / 9:12 AM / a month ago

UPDATE 2-MTU Aero ups 2017 profit goal on strong spare parts business

* Q3 adjusted EBIT 129.8 mln eur vs poll average 124 mln

* Now sees 2017 profit of 600 mln eur vs previous 560 mln

* Sees spare parts sales stronger than expected this year

* Shares hit new high, top MDax gainer (Adds CEO comments, shares)

BERLIN, Oct 26 (Reuters) - German aircraft engine maker MTU Aero Engines increased its profit target for the year thanks to higher spare parts revenues outweighing deliveries of new engines, sending its shares to a record high.

The company, whose customers include Airbus, Boeing and Bombardier, said on Thursday it now expected adjusted EBIT of 600 million euros ($709 million)for the year, against a previous forecast of 560 million.

Its shares were up 5.5 percent at 144.10 euros at 0823 GMT, the biggest gainer on the MDax of medium-sized German companies. Earlier its shares hit a record high of 145.95 euros.

MTU now expects spare parts revenues to rise by around 10 percent, while revenues from commercial engine production will rise by a mid-to-high single-digit percentage.

It had previously forecast high single-digit growth for both businesses.

MTU typically makes higher profit margins on spares and maintenance activities than on delivering new engines.

MTU is a partner on the geared turbofan engine made by Pratt and Whitney, which powers the Airbus A320neo and Bombardier’s CSeries aircraft, both of which have seen delivery delays.

Lufthansa’s CEO said on Wednesday that the CSeries was not coming to its Swiss International Air Lines unit as quickly as it would like.

“The ramp-up has stabilised and improved,” MTU CEO Reiner Winkler told journalists. MTU said 250 GTF engines were delivered over the first nine months, including 120 in the third quarter.

MTU also confirmed a target given earlier this week by Pratt parent United Technologies to deliver 350-400 engines this year.

United Technologies on Tuesday said it had taken a $196 million charge in the third quarter after it held back some shipments of GTF engines and offered spares to airlines, which had been facing problems with engines already in service.

MTU has built provisions into its guidance for delays, but Winkler declined to give further details.

MTU reported adjusted earnings before interest and tax of 129.8 million euros, against a forecast for 124 million in a Reuters poll.

It altered its sales target due to exchange rate changes and now predicts revenues of around 5.1 billion euros instead of 5.3 billion.

$1 = 0.8464 euros Reporting by Victoria Bryan; Editing by Maria Sheahan; Editing by Jon Boyle

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